India is preparing a stepped-up deficit reduction plan in its annual budget due out next month, two government officials said, holding fast to fiscal targets that will require deep spending cuts and could pose fresh risks in a slowing global economy.
Government officials had already flagged steep cuts to food and fertiliser subsidies that helped households and businesses weather the pandemic, and one of the officials added that growth in government capital investment - a key driver for one of the world's fastest growing major economies - will also be curbed.
The two officials said the government will aim to cut its fiscal deficit to 5.8-5.9% of GDP in the year from April 1, from an estimated 6.4% in the current year, and will stick to its broader target set last year of reaching 4.5% by 2025/26.
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