Economic Affairs Secretary Discusses Budget's Conservative GDP Growth Approach

Economic Affairs Secretary Ajay Seth emphasized the importance of conservative GDP growth estimates in the Budget to avoid larger fiscal deficits. The government has maintained a nominal GDP growth rate of 10.5%, with a fiscal deficit target of 4.9% for this year, reducing from the 5.1% estimated previously.

Economic Affairs Secretary Ajay Seth on Wednesday highlighted the Budget's conservative approach by assuming a reasonable nominal GDP growth rate of 10.5 per cent to prevent a larger fiscal deficit.

"Fiscal prudence this year demands realistic or a bit conservative revenue assumptions while ensuring adequate provisions for government priorities. This Budget reflects those prudential measures," he told PTI.

Addressing the fiscal policy context, Seth underscored that higher revenue growth assumptions could lead to a significant fiscal deficit if those revenues fail to materialize. The current Budget includes an additional Rs 90,000 crore for newer schemes compared to the interim Budget.

With improved revenue collection, the fiscal deficit target for the current financial year is now reduced to 4.9 per cent, down from 5.1 per cent estimated earlier. However, the fiscal deficit estimate remains at 4.5 per cent for 2025-26.

In absolute figures, the deficit has narrowed to Rs 16.14 lakh crore from the prior estimate of Rs 16.85 lakh crore for the current fiscal year.

(With inputs from agencies.)