India needs to be flexible to meet fiscal glide path: Govt

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The Government of India said on December 20 that external shocks and global uncertainties require it to build flexibilities in its budget plans, even as it intends to meet its fiscal deficit target of 4.5% of GDP by the end of 2025/26.

"Effective management of the exogenous shocks and global uncertainties requires additional flexibilities in terms of expenditure management and fiscal consolidation," the government said.

The leading Bharatiya Janata Party (BJP) government at the Centre was explaining the reasons for not being able to table its rationale of deviating from the fiscal deficit glide path in parliament during the pandemic.

"Three continuous COVID-19 waves, ongoing Russia-Ukraine conflict and global economic uncertainties have affected almost all macroeconomic indicators," the Centre said.

India's fiscal deficit shot up to a record 9.3% in 2020/21, from 4.6% the previous year due to pandemic-related spending.

The government said economic projections amid global turbulence may bring risk of a considerable gap between projected numbers and final numbers.

The statement comes just over a month before Finance Minister Nirmala Sitharaman is set to present the federal budget for 2023/24 on February 1.

The government said it remained committed towards strong macroeconomic fundamentals and financial stability, and the Indian economy has performed better than other major economies.

The statement was released as a part of the government's Fiscal Responsibility and Budget Management Act that it presented in Parliament.