India's fiscal deficit for FY 2023-24 is estimated at around ₹17.95 lakh crore or 6% of GDP in FY24, thereby resulting in fiscal consolidation of 40 bps from the current fiscal, SBI Research says in its latest report. The net market borrowing of the Centre in FY24 is believed to be around ₹11.7 lakh crore, and with repayments of ₹4.4 lakh crore, gross borrowing is expected at ₹16.1 lakh crore. "We believe a switch of ₹50,000 crore is also likely to be announced."

SBI Research says with higher tax devolution from the Centre, the states are likely to borrow around ₹8 lakh crore in FY23, lower than earlier anticipated. In FY24, the overall gross borrowing by the Centre and states is likely to be ₹24.3 lakh crore (up from ₹22.2 lakh crore in FY23) and net borrowings ₹17 lakh crore (₹16.7 lakh crore in FY23). "We further believe that the Government will continue to rely on small saving schemes (₹5 lakh crore likely in FY24)," says Soumya Kanti Ghosh, group chief economic adviser, SBI Research.

He said the budget FY 2023-24 presents a challenge before the government to stick to the road map for fiscal consolidation, amid a global environment of declining inflation. "For India, this could make things difficult to set a nominal GDP number significantly higher than 10%, with a deflator of 3.5%. But this could also mean a higher GDP growth than anticipated at 6.2%," adds Ghosh.

For FY23, the total receipts of the government are estimated to be higher than budget estimates by around ₹2.3 lakh crore, on account of higher direct tax receipts (₹2.2 lakh crore), higher GST receipts (₹95,000 crore) but lower dividends (₹40,000 crore), lower fuel tax net of cess (₹30,000 crore) and lower disinvestment receipts (₹15,000-20,000 crore). "The expenditure is likely to be on the higher side of the BE by around ₹3 lakh crore on account of higher subsidy bill and additional spending announced by the government."

Taking this into account, the fiscal deficit of the government in FY 2022-23 is expected to be at ₹17.5 lakh crore, says the SBI note. However, the higher nominal GDP growth (15.4%) estimates can help in keeping the fiscal deficit at 6.4% of the GDP. In FY24, SBI assumes, the government expenditure is likely to increase by around 8.2% over FY23 estimates to ₹46 lakh crore.

The central government's fiscal deficit widened to ₹9.78 lakh crore in the April-November period, around 58.9% of the Budget Estimates for 2022-2023, the latest Controller General of Accounts (CGA) data shows. So far this fiscal year, the government's fiscal deficit was recorded the highest in September 2022 at ₹3.52 lakh crore, followed by June at ₹2.1 lakh crore and October at ₹1.8 lakh crore.

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