India’s fiscal deficit hits ₹11.7 trillion in April-January period, 74.5% of FY25 target

India's fiscal deficit for the April-January period of financial year 2024-25 stood at ₹11.70 trillion, 74.5% of the estimate for 2024-25, according to the data released by the Controller General of Accounts (CGA) on Friday.

The latest figure is higher than the ₹11.03 trillion registered a year ago, which was 63.6% of the estimates for 2023-24. The increase follows higher revenue expenditure and capital expenditure during the ongoing fiscal.

The central government's fiscal deficit target is 4.8% of the gross domestic product (GDP) for 2024-25, with a further reduction to 4.4% targeted for 2025-26.

Receipts and expenditure

During the April-January period, net tax receipts stood at ₹19.04 trillion, or 74.4% of the target set in the annual budget, against ₹18.80 trillion in the same period of the previous year, the CGA data showed.

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Non-tax revenue stood at ₹4.68 trillion or 88.1% of the annual budget estimates, and total revenue receipts stood at ₹23.71 trillion, or 76.8% of the estimates for 2024-25. Non-tax revenue stood at ₹3.38 trillion, and total revenue receipts stood at ₹22.18 trillion during the corresponding period of the previous fiscal.

Total government expenditure during the April-January FY25 period was ₹35.70 trillion, or 75.7% of the annual target, against ₹33.55 trillion in the year-ago period.

Capex stood at ₹7.57 trillion during the period, or 74.4% of the annual estimate for 2024-25, compared with ₹7.21 trillion during the year-ago period.

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During the April-January FY25 period, revenue expenditure stood at ₹28.13 trillion, or 76.1% of the annual target for 2024-25, up from ₹26.33 trillion in the year-ago period.

Expert take

Experts pointed out that gross tax collections grew 10.3% annually during the April-January FY2025 period, driven by strong income tax growth. While corporate tax collections dipped 0.6%, income tax surged 22%.

"The GoI’s capex needs to expand by about 15% YoY in February-March 2025, on a high base, or record a monthly run-rate of ₹1.3 trillion, to meet the FY2025 RE (revised estimates)," said Aditi Nayar, chief economist, ICRA.

"A slight miss in capex relative to the target of ₹10.2 trillion for FY2025 can’t be entirely ruled out. Overall, ICRA expects the fiscal deficit to print in line with the FY2025 RE of ₹15.7 trillion or 4.8% of GDP," Nayar added.

The government’s FY25 Capex target has been set at ₹11.11 trillion.

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For FY26, the Capex allocation has been taken by less than 1% over the FY25 budgeted estimate (BE).

Unprecedented dividend payout

The government’s tighter fiscal deficit target of 4.8% of GDP, outlined in February's annual budget, is bolstered by an unprecedented dividend payout from the RBI.

The ₹2.11 trillion disbursement marks a 141% increase over last year’s dividend and provides a crucial buffer for 2024-25, offsetting potential shortfalls in tax revenue or hikes in public spending.

This substantial payout aids the government’s adherence to its fiscal consolidation path, to lower the deficit to 4.4% by 2025-26.