NEW DELHI: The Centre’s fiscal deficit is likely to remain around 6% in the 2022-23 as government is unlikely to go on a fiscal consolidation mode given the economy still needs fiscal support from the government. Most analysts and economists TNIE talked to say that the economy is still in need of a government spending boost to sustain the growth.
They peg the fiscal deficit for 2022-23 at 5.8-6.3% compared to 6.8% budget target in 2021-22. India Ratings pegs FY23 fiscal deficit at 5.8-6%, chief economist of rating agency Crisil DK Joshi pegs it at around 6%. Research firm QuantEco says the fiscal deficit could be 6.3% in the next financial year.
A finance ministry official said that the fiscal deficit in FY23 is unlikely to be very low compared to the current financial year. In 202-22, the fiscal deficit is likely to be in the 6.6-6.8% range. Given that the economy is still in need of policy support, the government is unlikely to be in a hurry to move back to the path of fiscal consolidation, says a note from rating agency India Ratings.
“We estimate a 26% growth in capital expenditure to Rs 7 lakh crore in FY23, from Rs 5.5 lakh crore in FY22,” says a QuantEco research note. The government has set a target of reducing the fiscal deficit to 4.5% by 2025-26.