This budget is remarkable for its fiscal restraint—but not just that

Its revenue and primary deficit targets are impressive while other eye-catchers need monitoring

- Sachchidanand Shukla

The Union budget for 2025-26 is being hailed as a "thanksgiving" for the middle-class, while its personal income tax relief is being called "historic" and has hogged most of the limelight. But there are quite a few standout features other than these.

First things first. The remarkable and dogged focus on fiscal consolidation really is noteworthy. From a covid-high of 9.2% of gross domestic product (GDP) to 4.4%, the fiscal deficit is set to more than halve in just about six years.

Importantly, in absolute terms, the fiscal deficit is likely to remain flat at ₹15.7 trillion in 2025-26, as compared to 2024-25, and lower than its level of ₹16.5 trillion in 2023-24. While the fiscal deficit, which is a broader term that constitutes government spending as well as borrowing requirements, is the one that is under the spotlight, there are two other key measures.

The revenue deficit, which measures the gap between total revenue and expenditure, is also slated to continue to fall in absolute terms from ₹7.6 trillion to ₹6.1 trillion in 2024-25 and further to ₹5.2 trillion in 2025-26. Likewise, the primary deficit, one of the most critical measures of fiscal health, as it measures the money borrowed to fund its current operating expenditure, continues to shrink—from ₹5.9 trillion to ₹4.3 trillion in 2024-25 and further to ₹2.9 trillion. This is extraordinary.