India's Fiscal Deficit and Economic Growth
The Indian government's fiscal deficit for the first seven months of the 2024-25 financial year reached 46.5% of the annual target, according to government data released on November 29, 2023. This represents a gap of Rs 7,50,824 crore between the government's expenditure and revenue during the April-October period.
The government aims to reduce the fiscal deficit to 4.9% of GDP in the current financial year, compared to 5.6% in 2023-24. However, the current deficit is already at 46.5% of the target, raising concerns about the government's ability to meet its fiscal goals.
Meanwhile, India's GDP growth slumped to its lowest level in seven quarters at 5.4% in the second quarter of FY25. This slowdown is attributed to factors such as the contraction in mining growth and the impact on manufacturing and utility services.
The output of eight key infrastructure sectors also expanded at a slower pace of 3.1% in October 2024, compared to 12.7% growth in the same month last year. This further indicates a slowdown in economic activity.
The government's fiscal deficit and the slowdown in economic growth are concerning trends that need to be addressed. The government needs to take steps to increase revenue and control expenditure to meet its fiscal targets. Additionally, measures to boost economic growth are crucial to ensure sustainable development.