New Delhi, Jan 24 (FN Bureau) Fiscal deficit in absolute terms could decline in FY24 but as a per cent of GDP it could be at 5.9 per cent and is likely to be set at 5.5 per cent in FY25 interim budget, according to Soumya Kanti Ghosh, Group Chief Economic Adviser, State Bank of India. “ The Interim Budget will be presented against the backdrop of a 7.3 per cent growth in current fiscal. The strong momentum will allow the Government to work towards the path of fiscal consolidation. We believe net tax revenue is likely to exceed budget estimates by Rs 80,000 crores in current fiscal over the budget estimates, “ Ghosh said. “ Non tax revenue is likely to exceed budget estimates by Rs 50,000 crores.
Expenditure is likely to exceed budget estimates by around Rs 60,000 crores, but this number could be scaled down with the Government already employing an automatic fiscal stabilizer in terms of just in time fund releases based on spending patterns of several Ministries, “ he added. “ Gross tax revenue at 11.6 per cent of GDP in FY24 is likely to be a 16 year high. In FY25, we expect gross tax revenue to be at the highest ever in the last 2 decades. We believe fiscal deficit in absolute terms could decline in FY24 but as a per cent of GDP it could be at 5.9 per cent and likely to be set at 5.5 per cent in FY25 Interim Budget. The final budget to be presented in July could set it at lower level of 5.3 per cent-5.4 per cent depending on GDP numbers that will be released in May 2024, “ Ghosh further said. “
We believe in FY25, net market borrowing of the Centre will be around Rs 11.7 lakh crore and with repayments of Rs 3.6 lakh crore, gross borrowing are expected at Rs 15.3 lakh crore. However, the Government will adjust in switches and this could adjust gross borrowings lower than Rs 15 lakh crore. Even net issuance of T-Bills to the tune of Rs 50,000 crore is expected, “ he stated. Regarding the financing of fiscal deficit, the Government will continue to rely on small saving schemes. It can give a hard push to SSY (Sukanya Samriddhi Yojana), through encouraging fresh registrations in a mission drive mode, allowing one time registrations for all leftover cases up to 12 years, Ghosh said added that roping in Business Correspondent (BC) channel partners by banks can be extremely useful since banks have a low share vis-à-vis Post offices (16 per cent in number of SSY accounts though 32 per cent share in deposits). “ We expect the Government to make a mention of the push to solar roof tops to 1 crore households as envisaged by PM. In a similar vein, the Government could put out a road map to give a massive push to PMAY. The Government can unlock the Land Bank available with various Institutions across states and put them to constructive use for providing housing units to slum dwellers and marginalized segment of the population, “ Ghosh mentioned.