India's fiscal deficit touches 74.5% of full year target at end-Jan

The Centre's fiscal deficit touched 74.5 per cent of the annual target at the end of January 2025, according to the data released by Controller General of Accounts (CGA) on Friday.

In actual terms, the fiscal deficit -- the gap between expenditure and revenue -- was Rs 11,69,542 crore during the April-January 2024-25 period.

The deficit was 63.6 per cent of Revised Estimates (RE) of 2023-24 in the year-ago period.

The CGA data showed that the central government's tax revenue (net) was Rs 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 Rs 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.

In the Union Budget presented in Parliament, the fiscal deficit for 2024-25 has 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 Rs 15.69 lakh crore.

According to the data, Rs 10,74,179 crore has been transferred to state governments as devolution of share of taxes by Government of India up to January, which is Rs 2,53,929 crore higher than the previous year.

Out of the total revenue expenditure (Rs 28.12 lakh crore), Rs 8,75,461 crore was on account of interest payments and Rs 3,37,733 crore on account of major subsidies.

Commenting on the CGA data, 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 Rs 1.3 lakh crore, to meet the FY25 RE, she said.

"A slight miss in capex relative to the target of Rs 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 Rs 15.7 lakh crore or 4.8 per cent of GDP," Nayar said.

A fiscal deficit is the difference between the total expenditure and revenue of the government.

It is an indication of the total borrowing needed by the government.