Govt to work out path to 4.5% fiscal deficit target amid high expenditures till FY26: Official
The government faces an increase in the subsidy bill, including free food grain and LPG schemes due to volatile prices.
The fiscal consolidation path of 4.5 percent by FY26 remains the government’s commitment.
The government will have to plan to reach the fiscal deficit target of 4.5 percent of GDP by FY25 with high expenditures on Minimum Support Price (MSP), food, fertiliser and Liquified Petroleum Gas (LPG) likely to remain in the next fiscal as well, a senior government official said.
“We will enter the next fiscal year with a lot of subsidies. Apart from the extension of PM Garib Kalyan Anna Yojana (PMGKAY), MSP is going up, which is another increase. Wheat and rice prices are going up, so automatically there will be an increase in MSP and recovery is zero,” the official told Moneycontrol.
“The fiscal consolidation path of 4.5 percent by FY26 remains the government’s commitment, we will see how to get there in the Union Budget,” he added.
The Union Cabinet on November 29, 2023, approved an extension of the free foodgrain scheme to around 81 crore poor people for five more years until December 2028. The extension will cost the exchequer around Rs 11.8 lakh crore during the period. In FY23, the food subsidy is estimated at Rs 2.04 lakh crore.
