India Meets FY25 Fiscal Deficit Target at 4.8% of GDP, Reflecting Robust Economic Discipline

In a significant affirmation of fiscal prudence, India’s Fiscal Deficit FY25 stood at 4.8% of GDP, in line with the government’s revised target, according to the data released on Friday by the Comptroller General of Accounts (CGA). The figures not only reflect disciplined expenditure but also indicate the central government’s resolve to maintain its fiscal consolidation path amid challenging economic conditions.

The fiscal deficit for FY25 amounted to ₹15.77 lakh crore, which represents 100.5% of the revised annual target, a moderate increase from 95.4% reported during the same period last fiscal year. This alignment with the revised estimate underscores the government’s cautious yet calculated approach to balancing spending with revenue generation.

FY25: Revenue Performance Reflects Strong Economic Backbone

The government’s total revenue receipts stood at ₹30.36 lakh crore, composed of ₹24.99 lakh crore in tax revenue and ₹5.38 lakh crore in non-tax revenue. While tax receipts reached 97.7% of the revised budget target, non-tax revenues exceeded expectations at 101.2%. However, both categories saw a slight dip compared to last year’s stronger performances of 100.1% and 106.9% respectively.

Notably, gross direct tax collections surged by 15.59% year-on-year, hitting ₹27.02 lakh crore, showcasing India’s resilient economic base and the government’s focus on broadening the tax net.

RBI Surplus and Capital Push Boost Fiscal Fortitude

Another major boost came from the Reserve Bank of India, which transferred a substantial ₹2.11 lakh crore as surplus for FY24. In a move that surpassed expectations, the RBI has approved an even larger dividend of ₹2.69 lakh crore for FY25, more than double the amount originally budgeted.

Simultaneously, capital expenditure, a key driver of infrastructure development and job creation, reached ₹10.52 lakh crore, achieving 103.3% of the revised goal. This proactive capex push plays a pivotal role in India’s roadmap to becoming the third-largest economy globally by 2030.

Subsidy Spending and Revenue Deficit Remain in Control

The central government allocated ₹4.14 lakh crore to major subsidies, including food, fertiliser, and petroleum, marking 101% of the revised allocation. This was slightly higher than the 100% utilization seen in the previous fiscal but still within a controlled range.

The revenue deficit stood at ₹5.67 lakh crore, translating to 92.9% of the targeted figure. This disciplined performance adds further credibility to the government’s fiscal management credentials.

A Calculated Step Towards Fiscal Consolidation

In her budget announcement earlier this year, Finance Minister Nirmala Sitharaman trimmed the FY25 fiscal deficit estimate from 4.9% to 4.8%, a decision influenced by strategic expenditure management and a windfall from the RBI dividend.

Looking ahead, the government has set an ambitious yet realistic fiscal deficit target of 4.4% for FY26, reinforcing its commitment to reduce the budget gap to below 4.5% by FY2026, in line with the medium-term fiscal roadmap.

This comes even as policymakers weigh the potential for income tax cuts and increased welfare spending to stimulate consumption amid what could be the slowest economic growth in four years.

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