Fiscal Deficit to Remain Within 4.4% Target Despite Extra Spending, Says FM Nirmala Sitharaman

Speaking in the Lok Sabha, Union Finance Minister Nirmala Sitharaman said the fiscal deficit for the financial year ending March 31 will remain within the budget target of 4.4% of GDP despite additional expenditure.

“The commitment, inclusive of the second supplementary, will be within the fiscal deficit presented on February 1,” Sitharaman said, adding that India’s macroeconomic framework has strengthened in recent years, allowing the country to absorb global economic shocks while continuing on the fiscal consolidation path.

The government has sought Parliament’s approval for gross additional expenditure of over ₹2.81 lakh crore in the current financial year through supplementary demands.

The Economic Stabilisation Fund (ESF) will provide fiscal space for the government to respond effectively to unexpected global turmoil and trade disruptions. “The government is preparing to face any unexpected events,” she said in Parliament. According to reports, ₹59,000 crore is being sought for the fund under the supplementary demands.

On the fertiliser crunch owing to disruptions in the supply of liquefied natural gas following the conflict in West Asia, Sitharaman said India has adequate stocks of about 163 lakh metric tonnes for the upcoming sowing season. Additional allocations are also being made to prepare for fertiliser demand during the rabi season (December–January).

“Six new urea units have been set up with an installed capacity of 12.7 lakh metric tonnes each, taking the combined capacity to 76.2 lakh metric tonnes. An additional 25.4 lakh metric tonnes of capacity will be added with two new units in Odisha,” she said.

However, recent reports have signalled rising concern for the fertiliser industry as some urea firms have shut down their factories. On Friday, Bloomberg reported that Indian officials have sought help from China to ease its export restrictions on urea sales.

The critical element, LNG, used for fertilisers is largely imported from Qatar. The near closure of the Strait of Hormuz has compelled Doha to halt its exports amid fears of attacks on shipments passing through the strait.

India imports nearly 50% of its LNG requirements, while it imports about 90% of its crude oil needs.