India’s Fiscal Deficit April-February FY25: 85.8% of Estimate
Why in the news
India’s fiscal deficit for the first eleven months of FY25 came in lower than last year’s proportion, as revenue growth outpaced spending.
Key facts
- Fiscal deficit: ₹15.70 trillion (85.8% of revised estimate) versus ₹17.35 trillion (86.5%) a year earlier.
- Total expenditure: ₹47.16 trillion, up from ₹44.90 trillion.
- Targets: 4.8% of GDP in FY25 and 4.4% in FY26, seen as achievable if revenue trends hold and spending stays disciplined.
Receipts and spending
| Component | Amount | Share of FY25 target | Note |
|---|---|---|---|
| Tax revenue | ₹25.57 trillion | 78.8% | Strong corporate and income tax |
| Non-tax revenue | ₹5.31 trillion | 92.9% | Up from ₹3.76 trillion; includes PSU dividends, spectrum sales, RBI surplus |
| Capital expenditure | ₹10.18 trillion | 79.7% | Up 8% year-on-year |
| Revenue expenditure | ₹36.98 trillion | 83.3% | Up 4.4% year-on-year |
Significance
- Higher tax and non-tax revenue ease the need for borrowing and tax hikes.
- Capex growth supports infrastructure, manufacturing and defence, with multiplier effects on GDP and jobs.
- Subdued revenue spending points to controlled subsidies.
- Lower deficit can lift credit ratings and investor confidence.
Concerns
- Global uncertainty, oil price swings and inflation.
- Need for expenditure rationalisation and better tax compliance.
Exam angle
- Fiscal deficit = total expenditure minus total receipts excluding borrowing.
- FY25 target: 4.8% of GDP; FY26: 4.4%.
- Capex share of FY25 target used: 79.7%.