Fiscal Deficit and Economic Projections for FY25
The fiscal deficit for the financial year 2024-25 (FY25) is expected to remain within target, despite a lower-than-budgeted nominal GDP growth rate of 9.7%, as per the First Advance Estimates by the National Statistics Office (NSO).
Key Points
- The government aims to manage the fiscal deficit at Rs 16.13 trillion, representing 4.9% of GDP for FY25.
- The capital expenditure (capex) target for FY25 was set at Rs 11.1 trillion, but experts anticipate it will be missed by Rs 1–1.5 trillion.
GDP Projections
- The Budget assumed a nominal GDP growth of 10.5% for FY25.
- According to NSO, the nominal GDP is expected to reach Rs 324.11 trillion in FY25, up from Rs 295.36 trillion in 2023-24.
Fiscal Performance and Capex
- Data from the Controller General of Accounts (CGA) indicates that the government utilized 52.5% of the fiscal deficit target by November FY25, which is 6.6% lower than the previous year.
- Capex declined by 12.3% year-on-year for April–November FY25, with only 46.2% of the target utilized, compared to 58.5% in the previous year.
Revenue Collection
- Net tax revenue collections reached 56% of the Budget Estimates (BE) for April–November FY25, compared to 62% in the previous year.
- Income tax collections rose by 24% year-on-year, while corporate tax collections decreased by 1%.
Overall Economic Outlook
- The absolute GDP is estimated at Rs 324.11 trillion, slightly below the BE of Rs 326.37 trillion.
- This deficit is unlikely to significantly impact fiscal consolidation in FY25, given current revenue and expenditure trends.
Additional Insights
- There is an expected consumption increase and slower capex for FY25.
- India's GDP is anticipated to grow by 6.4% in 2024-25.
