The Centre’s fiscal deficit – gap between expenditure and income – reached nearly 3/4th of the revised estimates in the first 10 months of this fiscal year, data released by Controller General of Accounts (CGA) on Friday showed. Fiscal deficit stood at ₹11.70 lakh crore or 74.5 per cent of annual estimates. This is higher than over 63 per cent in the corresponding period of the last fiscal.

The CGA data showed that the Central government’s tax revenue (net) was ₹19.03 lakh crore, or 74.4 per cent of the RE of 2024-25. It was at 80.9 per cent during the corresponding year of the last financial year. The total expenditure was at ₹35.7 lakh crore, or 75.7 per cent of the RE, according to the revenue-expenditure data of the Union Government. In the year-ago period, it was at 74.7 per cent of that year’s RE.

Annual estimate

In the Union Budget, fiscal deficit for 2024-25 had been pegged at 4.8 per cent of GDP (lower than earlier estimate of 4.9 per cent) and at 4.4 per cent for 2025-26. In absolute terms, the fiscal deficit for the financial year ending March 2025 is estimated at ₹15.69 lakh crore, out of which ₹11.69 lakh crore was the real amount during April-June period.

According to Paras Jasrai, Senior Analyst with India Ratings & Research, though fiscal deficit in first 10 months of FY25 as a proportion of annual number was at a five-year high, it was lower than FY12-FY20 period. The major reason for higher proportion of fiscal deficit in the first 10 months is higher allocation to States. The government in January, released one more additional instalment to the States (States’ share in Central taxes). Generally, this instalment is released in February. “Union Government in the first 10 months has released 83.5 per cent of the devolution to the States as per FY25 (RE). This proportion is the highest since FY01 (monthly data is available from April 2000),” he said.

Revenue expenditure up

Aditi Nayar, chief economist, ICRA, said revenue expenditure rose by 5.1 per cent year-on-year in January 2025, whereas capital expenditure surged by about 51 per cent, which would augur well for economic activity in the ongoing quarter.

The Centre’s capex needs to expand by about 15 per cent (y-o-y) in February-March 2025, on a high base, or record a monthly run rate of ₹1.3 lakh crore, to meet the FY25 RE, she said.

“A slight miss in capex relative to the target of ₹10.2 lakh crore 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 lakh crore or 4.8 per cent of GDP,” Nayar said.

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Published on February 28, 2025