New Delhi: The government is likely to lower fiscal deficit to 4.9-5 per cent of the GDP for this financial year in the upcoming Budget aided by revenue buoyancy. The government had pegged the fiscal deficit estimate at 5.1 per cent for the current fiscal year when it presented the interim Budget in February. “The union government is likely to set a fiscal deficit target at 4.9-5 per cent, lower than projected 5.1 per cent of GDP, without compromising the capital expenditure target of Rs 11.1 lakh crore,” ICRA Chief Economist Aditi Nayar told PTI. Finance Minister Nirmala Sitharaman is set to present the full Budget on July 23.

This will be her seventh Budget in a row. This budget aims to set the foundation for India’s journey towards becoming a developed nation (Viksit Bharat) by 2047. The government achieved a fiscal deficit of 5.6 per cent of the GDP during the previous financial year. “There is also a high likelihood of reducing the net market borrowings for the current financial year by Rs 35,000-Rs 55,000 crore vis-à-vis the interim Budget estimate of Rs 11.8 lakh crore, which would augur well for yields, along with the demand boost for G-secs owing to their inclusion in the J P Morgan Government Bond Index,” she said.

The incremental revenue receipts of Rs 1.2 lakh crore can be split to increase the revenue spending and facilitate fiscal consolidation, she said, adding, the government could utilise it for spurring consumption by providing some income tax sops.