India Manages Fiscal Deficit Target Despite Revenue Gaps in FY25

Fiscal balance maintained

India Manages Fiscal Deficit Target Despite Revenue Gaps in FY25: India has effectively met its fiscal deficit goal of 4.8% of GDP for the financial year 2024–25, even as revenue inflows came in lower than expected. The fiscal deficit stood at ₹15.77 lakh crore, exactly aligning with the revised target announced earlier in the year. This reflects strong financial management and adherence to fiscal commitments despite economic headwinds.

Revenue intake lower than estimated

The government’s total income for the year, including taxes and other receipts, amounted to ₹30.78 lakh crore, which is 97.8% of the revised estimate. There were a few weak areas:

• Miscellaneous capital receipts—mainly from government asset sales—generated only ₹17,202 crore, far below the expected figure.
• DIPAM data confirmed that just ₹10,131 crore was raised via disinvestment, much lower than targeted.
• Income tax receipts fell short by about 6%, while corporate tax collections performed better than planned.

This mismatch reveals a shift in income patterns and possibly reflects the impact of earlier tax cuts or slowdowns in individual income growth.

Government spending stayed in check

Total government expenditure for FY25 came to ₹46.55 lakh crore, or 97.8% of what was budgeted. What helped keep the fiscal deficit under control was the careful allocation of funds:

• Capital expenditure (capex) reached ₹10.52 lakh crore—103.3% of the allocated amount—showing a strong emphasis on building long-term assets like infrastructure.
• Revenue expenditure, which includes daily government operations like salaries, subsidies, and pensions, was lower than expected at ₹36.03 lakh crore.

This spending strategy—prioritizing capital formation over consumption—helped maintain fiscal discipline.

What lies ahead?

The government now targets a reduction of the fiscal deficit to 4.4% of GDP in FY 2025–26, as stated in the Union Budget. This is part of the fiscal consolidation roadmap outlined in the FRBM Act, which seeks to bring the deficit under control in a phased manner.

If tax efficiency and disinvestment momentum improve, India appears on track to meet its medium-term goals.

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