Budget projection of 10.5 pc nominal GDP reasonable: DEA secy

Economic Affairs Secretary Ajay Seth on Wednesday said the Budget has assumed a reasonable nominal GDP growth rate of 10.5 per cent as higher assumption could have led to a larger fiscal deficit. "As far as the current year is concerned, fiscal prudence places the demand on us that we are realistic or a bit conservative in assuming what the potential revenues may be while at the same time provide adequate provisions for productive priorities of the government. That is what this Budget does," he told PTI in a post-Budget interview.

Between the interim Budget to this Budget, he said there is a higher provision by about Rs 90,000 crore, including for newer schemes.

In that context, he said, "10.5 per cent we feel is a reasonable estimate of nominal growth in the economy. Because any higher assumptions would then require us to assume more revenues to come and if those revenues don't come in, then we ended up with a higher fiscal deficit."


That means more borrowings and it creates its own set of problems, he said, adding it is better to have conservative estimates.

Buoyed by improvement in revenue collection, the government has lowered the fiscal deficit target to 4.9 per cent for the current financial year as against 5.1 per cent estimated in February's interim Budget.

However, the Budget retained the fiscal deficit estimate at 4.5 per cent for 2025-26 as announced in February.

In absolute terms, the fiscal deficit has accordingly come down to Rs 16.14 lakh crore against Rs 16.85 lakh crore estimated earlier for the current financial year.