The lower deficit, experts said, will enable the government to contain its fiscal gap at the targeted 4.9% in 2024-25, despite a potential drop in disinvestment revenue. In absolute terms, the fiscal deficit stood at ₹4.75 lakh crore, against ₹7.02 lakh crore a year earlier. This is mainly because of a lower fiscal deficit earlier in the year when the resource mop-up had remained strong and government spending was constrained by the general elections.
The government aims to contain its fiscal deficit at 4.9% of gross domestic product (GDP) in 2024-25 and below 4.5% in 2025-26. The deficit had widened in August on the back of a post-poll spurt in revenue spending, but it shrank again in September by 33.4% from a year earlier to ₹39,344 crore.
Capital spending hit its peak this fiscal in September but—at ₹1.14 lakh crore—it still remained 2.4% lower than a year before. Experts blamed heavy monsoon downpours in various parts of the country for faltering project executions in recent months.
Meeting the FY25 capital spending target of ₹11.11 lakh crore would now entail a considerable expansion of 52% in the second half of this fiscal from a year before, said ICRA chief economist Aditi Nayar. “This appears rather challenging at this juncture,” she added.The capex target miss could provide “some cushion to absorb the shortfall on account of disinvestments and taxes,” Nayar reckoned. She said the 2024-25 fiscal deficit will likely print in line with or trail the target of ₹16.1 lakh crore, or 4.9% of the GDP. Revenue expenditure in the first half of this fiscal grew just 4.2% from a year earlier to ₹16.97 lakh crore, against the annual target of a 6.2% rise. The government’s major subsidy payout (on account of food, fertiliser and fuels) in the first half touched 56% of the annual estimate, compared with 55% a year earlier.
The pace of increase in net tax receipts in the first half of this fiscal touched 9% year-on-year, lower than the full-year target of 11.1%, to touch ₹12.65 lakh crore. Non-tax revenue mop-up, boosted by a record RBI dividend windfall of ₹2.11 lakh crore, surged 50.9% to ₹3.57 lakh crore.
