Nominal GDP growth at 11.5%, fisc deficit aim at 5.3% in Budget

Govt wants to cut fiscal deficit by 140 bps in two years to 4.5% of the GDP

- Gireesh Chandra Prasad & Utpal Bhaskar

The Union budget on February 1 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 lakh crore. In FY24, nominal GDP size was ₹296.6 lakh crore, 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.