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Informist, Tuesday, Jul 23, 2024

NEW DELHI – Industrialists today welcomed the focus of the Budget to reduce fiscal deficit, terming the move as fiscally responsible. 

"The government’s commitment to lower debt to GDP ratio shows that the government is serious about managing the fiscal deficit. The government has shown fiscal prudence in restricting itself. It is a good indicator for the corporates too," Sunil Kant Munjal, chairman of Hero enterprise said at a session organised by the Confederation of Indian Industries.

The Budget today projected the fiscal deficit at 4.9% of GDP, 20 basis points lower than the Interim Budget target of 5.1%.

Presenting the Budget, Finance Minister Nirmala Sitharaman said the fiscal consolidation path announced in 2021 has served the economy very well and the government aims to reach a deficit below 4.5% next year. Sitharaman said from 2026-27, it will be the government's endeavour to keep the fiscal deficit each year such that the Central government debt will be on a declining path as a percentage of GDP.

Janmejaya Sinha, India chairman of the Boston Consulting Group, said India’s aim of bringing down the fiscal deficit to 4.5% is already half of the US or the UK. "We all went out of gear with COVID. FRBM (Fiscal Responsibility and Budget Management Act) did not think that a pandemic would take the country out. Once you go up to 9.6%, to get to 3% will take a few years because you have a tradeoff between the short and the long term," he said.

"If you go to 3% too quickly, you will throttle economy’s growth," Sinha said, referring to the FRBM target of reducing the fiscal deficit to 3.0% of GDP. 

According to Sinha, this would be the right time for international credit rating agencies to upgrade India’s rating. “It is high time the country gets a full-fledged upgrade,” he said. 

Rajan Navani, chairman and managing director at Jetline group, said that the government is taking a 25-year journey and so "even if it takes a few more years to get the deficit under control, the move is in the right direction."  End

Reported by Pallavi Singhal

Edited by Saji George Titus

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