NEW DELHI: India’s fiscal deficit for the April-September period reached Rs4.75 lakh crore, approximately 29.4 per cent of the budgeted target for the fiscal year 2025 (FY25), according to government data released on Wednesday.
Net tax revenue for the first half of the current fiscal amounted to Rs12.65 lakh crore, reaching 49 per cent of the yearly target, up from Rs11.6 lakh crore during the same period last year.
This fiscal gap of Rs4.75 lakh crore falls within the total ceiling of Rs16.85 lakh crore set for the current year, as per the provisional data provided by the Controller General of Accounts (CGA).
The government aims to achieve a fiscal deficit target of 4.9 per cent of GDP by March 2025, aligned with its fiscal consolidation goals.
Aditi Nayar, Chief Economist and Head of ICRA, noted that the fiscal deficit had decreased from Rs7 lakh crore in April-September FY2024 to Rs4.7 lakh crore in H1 FY2025.
Fiscal deficit drops
This reduction was supported by the RBI’s early dividend payment and a year-on-year (YoY) decline in capital expenditure. “Net tax revenues rose by 9 per cent YoY, while non-tax revenues grew by 51 per cent, driven by the RBI dividend.
“Meanwhile, revenue expenditure saw a modest 4 per cent growth, and capital expenditure contracted by 15 per cent,” Nayar explained.
Capital expenditure
In Q2 FY25, capital expenditure increased by 10.3 per cent YoY, which is expected to support economic growth for the quarter. ICRA anticipates that income tax collections may exceed the FY2025 revised budget estimate (RBE) of Rs11.5 lakh crore, unless significant refunds are issued later in the fiscal year.
Corporate tax receipts are expected to align with or be slightly below projections. Non-tax revenue reached Rs3.57 lakh crore by September, achieving 65.5 per cent of the Union Budget’s projection of Rs5.45 lakh crore for FY25.
The fiscal balance was supported by the RBI’s dividend of Rs2.1 lakh crore, paid to the central government for FY2024, and lower capital expenditure. Data indicates that capital spending from April to September totaled Rs4.14 lakh crore, representing 37.3 per cent of the annual target, down from 49 per cent achieved in the same period last year.
