“The resilience in the fiscal performance of the Union Government has been facilitated by the recovery in economic activity, buoyancy in revenues from direct taxes and GST, and realistic assumptions in the Budget,” the Survey said. “The prudent assumptions in Budget FY23 provided a buffer to the government during global uncertainties.”
Finance Minister Nirmala Sitharaman tabled the Survey in the parliament today. The Survey is prepared by the finance ministry’s Chief Economic Adviser V Anantha Nageswaran and it lays the groundwork for Narendra Modi-led government’s last full-year spending plan before national polls in 2024.
The Survey, which comes a day before the government’s annual budget, suggested the government would stay fiscally prudent to leave room for more policy action in uncertain times. The government will focus on rebuilding fiscal space lost during the pandemic to counter new risks from a challenging global environment.
In reality, fiscal discipline also translates into a fiscal stimulus for all sections of the economy through lower interest rates, it added.
“With the continuing global risks and uncertainties, the availability of fiscal space with the governments has become paramount,” according to the Economic Survey. “There is a need for continued vigilance and adherence to the path of fiscal prudence, but an undue alarm is unwarranted.”
India’s fiscal deficit for the first eight months of this fiscal year through November stood at 9.78 lakh crore rupees, or 58.9% of annual estimates, government data showed today. The fiscal deficit widened from 46.2% reported in the comparable year-earlier period.India entered the pandemic with a stretched fiscal position. However, the government’s prudent and calibrated fiscal response enabled stable public finances even amidst the present uncertainties.
India’s fiscal deficit had ballooned to 9.2% of GDP in fiscal year 2021 and i expected to narrow to 6.4% this fiscal year.
“This gradual decline in the Union government’s fiscal deficit as a per cent of GDP, in line with the fiscal glide path envisioned by the government, is a result of careful fiscal management supported by buoyant revenue collection over the last two years.”
The Survey also said the central government should continue incentivising the States for reforms and higher capital spending to ensure a stronger General government. The capex-led growth strategy will ensure sustainable debt levels in the medium term.