Govt’s fiscal management better than UPA’s: Nirmala Sitharaman

However, due to the COVID-19 pandemic and proactive government measures to protect lives and livelihoods, the fiscal deficit surged to 9.2% of GDP in FY21, increasing the central government’s debt to 61.4% of GDP.
Union Finance Minister Nirmala Sitharaman
Union Finance Minister Nirmala SitharamanFile photo | EPS

NEW DELHI: The current government’s fiscal management appears more effective compared to the UPA’s, despite the challenges posed by the COVID-19 pandemic, finance minister Nirmala Sitharaman said on Monday.

Debt increased significantly during the UPA rule from FY04 to FY14, growing 3.2 times, whereas the increase was lower from FY14 to FY24, at 2.9 times, even with the pandemic’s impact necessitating borrowing for relief efforts amid falling revenues.

As per Sitharaman, central government’s debt, which was 52.2% of GDP at the end of FY14, was reduced to nearly 48.9% in FY19 through gradual fiscal consolidation. During this period, the fiscal deficit was lowered from 4.5% in FY14 to 3.4% in FY19.

However, due to the COVID-19 pandemic and proactive government measures to protect lives and livelihoods, the fiscal deficit surged to 9.2% of GDP in FY21, increasing the central government’s debt to 61.4% of GDP.

“Post-pandemic, our government pursued a balanced approach to fiscal consolidation while sustaining growth. This strategy reduced fiscal deficit from 9.2% of GDP in FY21 to 5.8% in Revised Estimates for FY24,” she wrote on X.

The interim budget forecasts a rise in fiscal deficit to 5.1% of GDP in FY25. The government’s debt-to-GDP ratio fell from 61.4% in FY21 to 57.1% in FY24. She criticised the UPA, saying during their tenure, from FY09 to FY14, gross fiscal deficit (GFD) to GDP ratio remained at 4.5% for six consecutive years. In three years, it ranged between 4.5% and 5% of GDP.

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