Union Budget 2025: Fiscal Deficit Challenges
India faces challenges in reducing its fiscal deficit to 4.5% of GDP by FY 2025-26 due to sluggish economic growth and reduced tax collections. The deficit, which peaked at 9.5% during the pandemic, has seen a slow recovery. The NK Singh Committee proposed a fiscal glide path targeting a 3% deficit by 2020, disrupted by the pandemic. High deficits may lead to inflation and higher borrowing costs, affecting long-term growth. Achieving fiscal discipline while supporting economic growth demands strategic planning and difficult policy choices.
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