Road Map for Fiscal consolidation

Syllabus: GS-III

Subject: Economy

Topic: Fiscal policy and Budgeting

Issue: Fiscal consolidation

  • Interim budget emphasised on increasing capital expenditure and fiscal consolidation.
  • Capital expenditure is increased to 11.1% in the interim budget over 2023-24 . It is expected to go up to 17% in regular budget.
  • Capital expenditure as % of GDP saw only a marginal increase – 3.2% in 2023-24 to 3.4 in 2024-25
  • Fiscal deficit is expected to go down to 5.1%. centre’s fiscal deficit target is 3% by 2028-29
  • House hold savings in financial assets is decreasing.

Estimations for 2024-25

  • buoyancy of tax revenue – 1.33
  • Real GDP growth rate of 7%

Committee on FRBM act, 2003

Debt to GDP ratio of centre and states put to together shall not be more than 60% and centre shall not cross 40%.

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