Nominal growth of 11.5% in budget aim

Deficit target of 5.3% for next fiscal, in journey to 4.5% by FY26

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The Union budget on 1 February may assume a nominal economic growth rate of about 11.5% and a fiscal deficit target of about 5.3%, a person with knowledge of discussions in the government said, as the Centre aims to leverage the budget to meet its fiscal consolidation goal over the next two years.

The 11.5% nominal GDP (gross domestic product) growth rate projection for FY25, which is expected to form the basis for next budget's calculations, entails a real GDP growth rate of 7% and a GDP deflator of about 4.5%. An 11.5% growth rate would take the nominal GDP for FY25 to 330 trillion. In FY24, nominal GDP size was ₹296.6 trillion, as per the first advance estimate released in December.

An email sent to a finance ministry spokesperson on Friday seeking comment was unanswered till press time.

Nominal GDP refers to the total value of all goods and services produced in a fiscal year, whereas real GDP gives the same value by adjusting for inflation (price rise), with the help of the GDP deflator.

The likely budget assumption of 11.5% nominal GDP growth in FY25 is the most ambitious projection since the 14.4% expansion projected in the budget for FY22, in which the economy rebounded from a pandemic-induced contraction.