Against the estimated nominal GDP of around Rs 302 lakh crore, which would translate into a growth of 10.5%, the National Statistical Office now pegs it at over Rs 296 lakh crore for 2023-24, which would translate into an expansion of 8.9%. Nominal GDP is calculated at current prices and does not take into account the effects of inflation.
Finance Minister Nirmala Sitharaman had estimated the fiscal deficit at Rs 17,86,816 crore, which was 5.9% of the earlier nominal GDP estimate. With the new estimates, at the budgetary level, the fiscal deficit is expected to remain above 6% of GDP.
Tax collections and dividend receipts are expected to more than compensate for the expected shortfall from disinvestment. Given the strong stock markets and healthy growth of companies, DIPAM will look to raise more resources.
On the expenditure front, the Center will face a big challenge ahead of the elections, as it has already had to spend more than expected. However, going forward, ministries will have to tighten their seat belts and the finance ministry may be stingy in allowing further expenditure. Moreover, many ministries that are behind in spending the allocated funds may need to return the funds.
“The fiscal deficit at the end of November 2023 stood at Rs 9,06,000 crore or 50.7% of the BE (Budget Estimate). However, taking into account today’s revised GDP figures, if tax receipts are up by BE, the government will have to Cut expenditure by Rs 37,178 crore without changing the FD (fiscal deficit) target of 5.9% of GDP in 2024,” said Soumya Kanti Ghosh, group chief economic adviser at State Bank of India.
