Govt aims to bring fiscal gap to 4.9% of GDP in current financial year

Non-tax revenue was up 50.2% on year at `4.270 trln in Apr-Nov period

Informist New Delhi

The Indian government's fiscal deficit in the first eight months of 2024-25 (Apr-Mar) was Rs 8.466 trillion, down 6.6% on year, data released by the Controller General of Accounts on Tuesday showed. 

The fiscal deficit for Apr-Nov accounted for 52.5% of the full-year target of Rs 16.133 trillion set in the Union Budget for FY25. The fiscal deficit in Apr-Nov of FY24 had accounted for 50.7% of the full-year target and 46.5% in Apr-Oct this year.

The government has set a fiscal deficit target of 4.9% of GDP for FY25 against 5.6% of GDP achieved last year. According to the government's medium-term fiscal consolidation roadmap, the fiscal deficit is to be lowered to below 4.5% by FY26.

Total receipts of the government rose 8.5% on year to Rs 18.944 trillion in Apr-Nov, while total expenditure was up 3.3% at Rs 27.410 trillion. Capital expenditure during Apr-Nov declined 12.3% on year to Rs 5.135 trillion.

The government's total receipts were driven higher by a 10.7% on-year increase in gross tax collections to Rs 22.610 trillion during Apr-Nov. Gross tax mop-up remained robust in the first eight months of FY25, thanks to a boost from income tax collections even as corporate tax collections disappointed.

In November, total revenue was up 10.6% at Rs 1.713 trillion, thanks to a 60.9% surge in income tax collections to Rs 743 billion. On other hand, corporate tax collections were down 26.6% last month at Rs 238 billion.

While revenues were robust in November, total expenditure only rose 3.6% on year to Rs 2.671 trillion, largely led by a 21.3% jump in capital expenditure to Rs 469 billion. The fiscal deficit in November was down 6.9% on year at Rs 958 billion. 

Non-tax revenue was up 50.2% on year at Rs 4.270 trillion in Apr-Nov, with the surge mainly attributable to the record-high surplus transfer of Rs 2.11 trillion from the Reserve Bank of India in May.

With total revenue collection staying robust in Apr-Nov and capital expenditure lagging, economists expect the government to overachieve its fiscal consolidation target for this year. Economists expect the government to lower the fiscal deficit to 4.8% of GDP from the 4.9% target set in the Budget.

Informist had reported earlier this month that the government has space to reduce its FY25 fiscal deficit by 10-20 basis points below the Budget target of 4.9% of GDP.