The Centre’s fiscal deficit for the April-December 2024 period came in at ₹9.14 lakh crore, which was 56.7 per cent of the Budget Estimate (BE) level of ₹ 16.13 lakh crore, official data showed.

For the same period last financial year, fiscal deficit was at ₹9.8 lakh crore, or 55 per cent of BE, according to data with the Controller General of Accounts (CGA).

Capital expenditure for the said period stood at ₹6.85 lakh crore, which is 61.7 per cent of BE of ₹11.11 lakh crore for 2024-25. Capex outlay for the year-ago period was 67.3 per cent of Budget estimate. 

In April-December period of FY25, the Centre’s net tax revenues rose by 6.5 per cent y-o-y (dampened by the additional devolution of taxes to the States) to ₹18.43 lakh crore. 

Non-tax revenues expanded by 43 per cent boosted by the RBI dividend. Revenue expenditure grew 7 per cent while capex rose by a relatively muted 1.7 per cent. 

I-T collections up 22%

Gross tax collections rose by 11 per cent on a y-o-y basis in 9MFY25, aided by elevated growth in income tax collections. While corporate tax collections have been tepid, rising by just 3 per cent y-o-y in April-December FY2025, income tax collections have expanded by 22 per cent during this period. 

ICRA’s Chief Economist and Head-Research & Outreach Aditi Nayar believes that personal income tax collections may surpass the FY25 BE of ₹11.5 lakh crore, unless large refunds are released in the latter part of the fiscal, while corporation tax inflows may print in line or slightly lower than the target.

Revenue expenditure rose by a mild 1.6 per cent y-o-y in the month of December 2024, whereas capital expenditure surged by ~95 per cent in the month, which would augur well for economic activity. 

Nayar said that the Centre’s capex still needs to expand by a sharp ~55 per cent y-o-y in January-March 2025 or record a monthly run rate of ₹1.4 lakh crore, to meet the FY25 Budget estimate, which appears challenging. We are apprehensive that the capex target of ₹11.1 lakh crore for FY25 will be missed by a margin of ~₹0.8-1 lakh crore, although this is lower than ICRA’s earlier estimate of a ₹1.4 lakh crore miss, owing to the unexpectedly robust spike in December 2024.

“Nevertheless, the anticipated miss in the capex target is expected to offset any shortfall on account of disinvestment and taxes, as well as the impact of the recent supplementary demand for grants. Accordingly, ICRA expects the fiscal deficit to mildly trail the FY25 BE of ₹16.1 lakh crore or 4.9 per cent of the GDP,” Nayar said. 

Reacting to the latest fiscal deficit numbers, Madan Sabnavis, Chief Economist, Bank of Baroda, said that he expects the fiscal deficit for the current fiscal to come in at a lower 4.8 per cent of GDP as compared to 4.9 per cent pegged at the Budget estimate level.

Published on January 31, 2025