The Centre’s fiscal deficit at the end of the first half of the current financial year declined to Rs 4.7 trillion, or 29.4 per cent of the FY2025 budget estimate, aided by the Reserve Bank of India’s dividend payment earlier this fiscal and a year-on-year contraction in capital expenditure, according to the latest data released by the Controller General of Accounts (CGA).
The fiscal deficit – the gap between expenditure and revenue – was 39.3 per cent of the budget estimates for the corresponding period last year. The government has set a fiscal deficit target of 4.9 per cent of gross domestic product for the current financial year.
Gross tax collections expanded by 12 per cent in September 2024, and income tax collections increased by 25 per cent during this period compared to last year. Total receipts increased by 51 per cent in April-September of FY2025, almost at the same level as last year, which was 52 per cent.
Capital expenditure – spending on building physical infrastructure – for the April-September period of FY2025 stood at 37 per cent of the budget estimate of Rs 11.1 trillion, compared to 49 per cent in the corresponding period last year.
The government would need to spend Rs 1.16 trillion per month in the second half of this fiscal. “This entails a considerable expansion of 52 per cent relative to the second half of the last financial year.
This appears rather challenging at this juncture, and we expect the capex target of Rs 11.1 trillion for FY2025 to be missed by a margin of at least Rs 0.5 trillion,” said Aditi Nayar, chief economist, ICRA Limited.
Economists noted that after a slowdown in the first quarter of this financial year due to parliamentary elections, capital expenditure expanded sharply in July, but the momentum has not sustained in the subsequent two months.
Nearly half of the ~1.12 trillion collected by states and Union Territories (UTs) as the building and other construction workers’ welfare cess remained unutilised till March 31 this year, a Business Standard analysis has revealed.
Net tax revenue in the first half of this financial year stood at 49 per cent of budget estimates, at the same level as in the corresponding period last year.
“We believe that income tax collections may surpass the FY2025 revised budget estimate of Rs 11.5 trillion, unless large refunds are released in the latter part of the fiscal, while corporation tax inflows may print in line with or slightly lower than the target. Overall, the miss in the capex target is expected to provide some cushion to absorb the shortfall on account of disinvestments and taxes,” Nayar added.