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Former Finance Minister and senior Congress leader P Chidambaram on Saturday acknowledged the Narendra Modi-led government’s efforts in containing the debt and fiscal deficit even in the days of economic volatility.
Speaking at the India Today Conclave 2023, Chidambaram, who has presented nine union budgets under the UPA government, there is a lot to be done in terms of developing the country.
“After the bitter experience of 2009-11, the lesson I learned and the lesson I want to inculcate is that we should manage our debt well. We must manage our borrowing because that affects government spending, inflation, and it affects our ability to spend. I would give credit to this government for its single-minded focus on containing the deficit and debt management,” Chidambaram said at the India Today Conclave 2023 in Delhi.
Last month, Controller General of Accounts (CGA) data showed the fiscal deficit touched 67.8 per cent of the full-year target at the end of January due to higher expenses and lower revenue realizations.
CGA said that in actual terms, the fiscal deficit, the gap between the expenditure and revenue collection, during the April-January period stood at Rs 11.9 lakh crore. The government borrows from the market to finance its fiscal deficit.
The fiscal deficit in the comparable period of 2021-22 was 58.9 per cent of that year’s Revised Estimate (RE) in the Budget.
For the full year 2022-23, the government expects the deficit at Rs 17.55 lakh crore or 6.4 per cent of the GDP.
Fiscal deficit for laymen is the difference between the total revenue and total expenditure of the government. It is an indication of the total borrowings needed by the government. The majority of the fiscal deficit is financed through internal market borrowings, with a small portion coming from securities against savings, provident funds, and external debt.
In the Union Budget presented by Finance Minister Nirmala Sitharaman on February 1, the fiscal deficit target for 2023-24 was projected at 5.9 per cent of the GDP.
For the current year ending March 2023, the deficit has been retained at 6.4 per cent of the GDP.
The government intends to bring the fiscal deficit below 4.5 per cent of the GDP by 2025-26.
As per the 2023 Union Budget, India’s external debt is only 1 per cent of the total fiscal deficit, which is estimated at Rs 22,118 crore.
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