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Informist, Saturday, Feb. 1, 2025

 

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--BUDGET: FY26 fiscal deficit pegged at 4.4% of GDP 
--BUDGET: FY25 fiscal deficit revised to 4.8% of GDP 
--CONTEXT: Budget pegged FY25 fiscal deficit at 4.9% of GDP 
--BUDGET: FY26 fiscal deficit pegged at INR 15.689 tln 
--BUDGET: FY25 fiscal deficit revised to INR 15.695 tln 
--CONTEXT: Budget pegged FY25 fiscal deficit at INR 16.133 tln

 

NEW DELHI – The Union Budget on Saturday targeted a fiscal deficit of 4.4% of GDP for 2025-26 (Apr-Mar), and lowered the target for FY25 by 10 basis points to 4.8% of GDP.

 

At 4.4% of GDP, the fiscal deficit for FY26 is slightly below the 4.5% of GDP estimated in an Informist poll. As per the poll, the fiscal deficit for the current year was seen being lowered to 4.8% from the target of 4.9%. The fiscal deficit was 5.6% of GDP in FY24.

 

In absolute terms, the fiscal deficit for FY26 is estimated at INR 15.689 trillion, compared to the revised estimate of INR 15.695 trillion for the current year. The Budget for FY25 had projected the fiscal deficit at INR 16.133 trillion.

 

Data released Friday showed the fiscal deficit in the first nine months of FY25 was at INR 9.141 trillion, accounting for 58.2% of the revised estimate for FY25.

 

The government has lowered the fiscal deficit target for FY25 to 4.8% of GDP, even as nominal GDP growth this year is lower than expectations. According to the statistics ministry's first advance estimate, the nominal GDP is estimated to grow 9.7% in FY25, compared with 10.5% projected in the Budget.

 

The Budget marks the culmination of the government's medium-term fiscal consolidation roadmap announced in the aftermath of the COVID-19 pandemic. Under the roadmap, the fiscal deficit was to be lowered to below 4.5% of GDP by FY26 from a record high of 9.2% of GDP in FY21. The government has said that from FY27 onwards it will endeavour to keep the fiscal deficit each year such that the Centre's debt will be on a declining path as percent of GDP.

 

As per the Fiscal Responsibility and Budget Management statement, the government will aim to lower its debt to 49-51% of GDP by March 2031. The central government debt is seen 57.1% of GDP in FY25 and 56.1% in FY26.

 

The Budget projected net tax collections in FY26 at INR 5.830 trillion, up 9.8% from the revised estimate of INR 5.310 trillion. Total receipts, excluding borrowing, are pegged at INR 34.964 trillion, up 11.1% from the revised estimate of INR 31.470 trillion in FY25. The total expenditure in FY26 is projected at INR 50.653 trillion, up 7.4% on year from the revised estimate of INR 47.165 trillion.

 

The following table details the government's balance sheet (in INR billion):

 

	Budget Estimate	Revised Estimate	Budget Estimate	Year-on-Year Change (%)
	FY26	FY25	FY25	Budget estimate vs Revised estimate
Revenue receipts	34,204.09	30,879.60	31,292.00	10.8%
Net tax revenue	28,374.09	25,569.60	25,834.99	11.0%
Non-tax revenue	5,830.00	5,310.00	5,457.01	9.8%
Non-debt capital receipts	760.00	590.00	780.00	28.8%
Recovery of loans	290.00	260.00	280.00	11.5%
Other Receipts	470.00	330.00	500.00	42.4%
Total receipts	34,964.09	31,469.60	32,072.00	11.1%
Revenue expenditure	39,442.55	36,980.58	37,094.01	6.7%
Interest payments	12,763.38	11,379.40	11,629.40	12.2%
Capital expenditure	11,210.90	10,184.29	11,111.11	10.1%
Total expenditure	50,653.45	47,164.87	48,205.12	7.4%
Revenue deficit	5,238.46	6,100.98	5,802.01	(-)14.1%
Revenue deficit (% of GDP)	1.5%	1.9%	1.8%	-
Fiscal deficit	15,689.36	15,695.27	16,133.12	0.0%
Fiscal deficit (% of GDP)	4.4%	4.8%	4.9%	-
Primary deficit	2,925.98	4,315.87	4,503.72	(-)32.2
Primary deficit (% of GDP)	0.8%	1.3%	1.4%	--

 

End

 

Reported by Shubham Rana

Edited by Saji George Titus

 

 

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