Flexible fiscal targets

Financial markets and economists have welcomed the sustained commitment of the Union government to fiscal consolidation. As Union Finance Minister Nirmala Sitharaman announced in the annual Budget presented in July, the government will aim to contain the fiscal deficit at 4.9 per cent of gross domestic product (GDP) in the current year, compared to the estimate of 5.1 per cent announced in the Interim Budget. The government is on course to restrict the fiscal deficit below 4.5 per cent of GDP in 2025-26, a target that seemed reasonably difficult when it was first announced in 2021. Given