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Informist, Wednesday, Feb. 19, 2025

 

By Krity Ambey

 

NEW DELHI – The Rajasthan state Budget for 2025-26 (Apr-Mar) on Wednesday projected a fiscal deficit of 4.25% of Gross State Domestic Product for the next year, against 4.11% of GSDP in the revised estimate for FY25. With this, the state's deficit is set to breach the fiscal deficit limit mandated by the Centre for states for the third consecutive year. 

 

The Centre's Budget for FY24 lowered the fiscal deficit limit for the states to 3.5% of GSDP. This is as per the recommendation of the 15th Finance Commission, which set the deficit limit of states at 3.0% of GSDP from FY24 to FY26, with an additional 0.5% linked to power sector reforms.

 

According to Rajasthan's Fiscal Responsibility Budget Management Statement for FY26, the state's fiscal deficit is unlikely to settle within the mandated limit even after the end of the 15th Finance Commission period - Mar. 31, 2026. The state's fiscal deficit is projected to be at 3.74% of GSDP in FY27, and 3.47% of GSDP in FY28.

 

In absolute terms, Rajasthan's fiscal deficit is likely to rise to INR 846.44 billion in FY26 from INR 700.91 billion in the revised estimate for FY25. The deficit was INR 655.80 billion in FY24.

 

The state is to fund 79% of its deficit through market borrowing in the next financial year. Rajasthan's Deputy Chief Minister Diya Kumari, who also holds the finance portfolio, has projected a gross market borrowing of INR 929.52 billion for FY26, up 20% from INR 773.06 billion in the revised estimate of FY25. The state's repayments of market loans for FY26 have jumped 37% to INR 258 billion. 

 

However, Rajasthan's total repayments, including other loans, are likely to fall 5% to INR 1.56 trillion in FY25 from the revised estimate of INR 1.64 trillion for FY25. The north Indian state's repayments saw a significant jump in FY23 when it doubled to INR 1.24 trillion from INR 550.09 billion a year ago. The state had repaid loans worth INR 1.62 trillion in FY24. 

 

Kumari has projected a capital outlay of INR 536.86 billion for FY26, accounting for 10% of the total expenditure. The state's total expenditure, which is expected to rise 15.1% in FY25, is likely to be INR 5.37 trillion in the next fiscal year, up 7.7% on year.   

 

Public debt, at INR 2.33 trillion, accounts for the largest proportion of Rajasthan's total revenue of INR 5.37 trillion, followed by the state's own tax revenue. The state's own tax revenue, which had grown in single digits in FY24, may jump 28% to INR 1.20 trillion in FY25. Rajasthan has projected its own tax revenue of INR 1.43 trillion in FY26.  End   

 

Edited by Saji George Titus

 

 

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