Government Fiscal Deficit Reaches 27% Of FY25 Target In April-August

The Union government's fiscal deficit expanded to 27% of the budgetary target at the end of the first five months for the financial year ending March 2025.

The gap between expenditure and revenue during April-August stood at Rs 4.35 lakh crore of the total limit set at Rs 16.85 lakh crore for the ongoing fiscal, according to provisional data released on Friday by the Controller General of Accounts.

The Union government has set a fiscal deficit target of 4.9% of GDP for the financial year ending March 2025, as it aims to continue on its fiscal consolidation path. This is after bettering its deficit target for the last fiscal to 5.6% of GDP.

Meanwhile, revenue receipts were at Rs 10.7 lakh crore during the first five months of the fiscal 2024-25, which is 32.5% of the fiscal year target.

The total expenditure until August reached Rs 16.52 lakh crore, amounting to 34.3% of the fiscal year's target. Of the total expenditure, interest payments accounted for Rs 4 lakh crore, according to the data.

In the first five months, the government's total expenditure reached Rs 16.5 lakh crore, accounting for 34.3% of the annual target.

Additionally, the revenue deficit until August stood at Rs 1.43 lakh crore, reaching 24.7% of the fiscal year target.

The fiscal deficit was aided by the RBI’s dividend payment in the early part of the year as well as the contraction in the capital expenditure, ICRA's Chief Economist Aditi Nayar said in an emailed statement.

The Reserve Bank of India paid Rs 2.1 lakh crore—the highest-ever surplus—as dividend to the central government for fiscal 2024.

"Given the trends in capex during April-August 2024, the GoI needs to incur a capex of approximately Rs 1.2 lakh crore per month during the last seven months of the fiscal, which portends an ambitious expansion of 41% relative to the same period of the previous fiscal," Nayar said, adding, "We believe that sustaining such a high average monthly run rate seems improbable and expect the capex target of Rs. 11.1 trillion for the fiscal 2024-25 to be missed by a small margin."

In a separate statement, the Ministry of Finance said that the government has received a total of Rs 12.17 lakh crore of total receipts up to August 2024. This includes Rs 8.73 lakh crore in tax revenue, which is the net amount received by the central government. Additionally, the government has received Rs 3.34 lakh crore in non-tax revenue and Rs 8,866 crore in non-debt capital receipts.

Besides, the Centre had transferred Rs 4.55 lakh crore to state governments as their share of taxes up to June. This is an increase of Rs 73,235 crore compared to the same period last year, the statement added.