Improved growth rate gives govt extra fiscal headroom

Revision in FY25 economic growth to 9.9% allows Centre to have slightly larger fiscal deficit

- Gireesh Chandra Prasad

The Union government, which is preparing to seek Parliament's approval for additional funding for the current financial year, now has extra fiscal headroom on account of the improvement in the economic growth rate to 9.9% in nominal terms, as forecast last Friday by the statistics ministry.

Finance minister Nirmala Sitharaman will present the second supplementary demands for grants—requests for Parliament's permission for additional spending in the current year—when the budget session reconvenes on 10 March, according to two people familiar with the development.

The slight upward revision in the economic growth rate projection—from 9.7% in January—allows the government to have a slightly larger fiscal deficit in absolute terms without breaching the target of 4.8% of nominal GDP set for the current financial year.