NEW DELHI, Feb 2 (Reuters) – India is ‘pretty’ assured it may meet its goal to chop its fiscal deficit by almost 200 foundation factors to 4.5% of GDP within the subsequent three years, assuming there is no such thing as a main international financial shock, a prime authorities official advised Reuters on Thursday.

On Wednesday, the federal government in its 2023/24 finances set a fiscal deficit goal of 5.9% of gross home product for the approaching monetary yr, down from the present yr’s goal of 6.4% of GDP. India’s fiscal yr begins on April 1.

As financial development continues and the federal government goals to chop spending on subsidies, the deficit ought to have the ability to fall to 4.5% of GDP by 2025/26, Finance Secretary T.V. Somanathan advised Reuters in an interview.

“We are fairly determined to achieve that consolidation … we will make a serious bid to reach the consolidation,” Somanathan mentioned.

India’s Economic Survey forecast 2023/24 development of 6% to six.8%, which might make it one of many world’s fastest-growing main economies.

“If growth were to be sustained that would help us in future fiscal consolidation,” Somanathan mentioned.

The fiscal deficit has come down from a document 9.3% of GDP in 2020/21 because of bills associated to the pandemic, however at 6.4% of GDP by the tip of the present fiscal yr it might nonetheless be a lot greater than its historic vary of 4%-4.5%.

Since 2020/21, the Indian authorities has greater than doubled its spending on infrastructure tasks together with roads, railways and ports to assist development amid weak non-public funding.

“I certainly think that consolidation is as much dependent on good growth as on expenditure,” Somanathan mentioned.

Reporting by Nikunj Ohri; Additional reporting by Aftab Ahmed; Editing by Susan Fenton

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