India’s Fiscal Deficit Reaches 74.5% of Annual Target by January 2025: CGA Data

New Delhi, February 28 – India's fiscal deficit for the first ten months of the financial year 2024-25 reached 74.5% of the annual target, as per data released by the Controller General of Accounts (CGA) on Friday. In absolute terms, the deficit stood at ₹11,69,542 crore during the April-January 2024-25 period.

For comparison, during the same period last year, the fiscal deficit was at 63.6% of the Revised Estimates (RE) for 2023-24.

Tax Revenues and Government Expenditure​

The net tax revenue collected by the central government amounted to ₹19.03 lakh crore, which is 74.4% of the RE for 2024-25. However, this marks a decline from 80.9% in the corresponding period of the previous year.

On the expenditure front, the central government spent ₹35.7 lakh crore (75.7% of the RE). A year ago, this figure was at 74.7% of that year’s RE.

A significant portion of this expenditure included:

• ₹10.74 lakh crore transferred to state governments as their share of taxes, ₹2.54 lakh crore more than the previous year.
• ₹8.75 lakh crore allocated for interest payments.
• ₹3.38 lakh crore for major subsidies.

Fiscal Deficit Projections and Capex Growth​

The Union Budget 2024-25 has pegged the fiscal deficit at 4.8% of GDP, a slight revision from the earlier estimate of 4.9%. For the upcoming financial year 2025-26, the government has projected a further reduction to 4.4% of GDP. In absolute terms, the estimated fiscal deficit for FY25 is ₹15.69 lakh crore.

According to Aditi Nayar, Chief Economist at ICRA, revenue expenditure saw a 5.1% year-on-year growth in January 2025. Meanwhile, capital expenditure (capex) surged by 51%, which is expected to boost economic activity in the ongoing quarter.

To meet the full-year capex target of ₹10.2 lakh crore, the Centre needs to increase capital spending by 15% YoY in the remaining two months or sustain a monthly expenditure rate of ₹1.3 lakh crore. However, Nayar cautioned that a slight miss in achieving the capex target cannot be ruled out.

Overall, ICRA expects the fiscal deficit to align with the FY25 Revised Estimate of ₹15.7 lakh crore (4.8% of GDP).

Understanding the Fiscal Deficit​

The fiscal deficit represents the shortfall between the government’s total expenditure and revenue, highlighting its borrowing needs. As India aims for fiscal consolidation, the latest data will play a crucial role in shaping economic strategies for the remainder of the financial year.