India's Fiscal Deficit Reaches 46.5% of Target in First Seven Months
The Indian government's fiscal deficit for the first seven months of the 2024-25 financial year reached 46.5% of the annual target, according to government data released on November 29, 2023. This represents a gap between the government's expenditure and revenue of Rs 7,50,824 crore during the April-October period.
The deficit stood at 45% of the Budget Estimates (BE) for the same period in 2023-24. The government had projected in the Union Budget to reduce the fiscal deficit to 4.9% of GDP in the current 2024-25 financial year, compared to 5.6% of GDP in 2023-24. In absolute terms, the fiscal deficit target for the current year is Rs 16,13,312 crore.
Revenue and Expenditure Data
Revenue-expenditure data for the first seven months of 2024-25 show that the net tax revenue amounted to approximately Rs 13 lakh crore, or 50.5% of the budget estimate for the year. At the end of September 2023, net tax revenue stood at 55.9% of the budget estimate.
The Union government’s total expenditure for the period from April to October was Rs 24.7 lakh crore, or 51.3% of the budget estimate, compared to 53.2% during the same period the previous year. Of the total expenditure, Rs 20 lakh crore was in the revenue account and Rs 4.66 lakh crore was allocated to the capital account.
Fiscal Deficit and GDP Growth
The fiscal deficit represents the difference between the government’s total expenditure and revenue, and serves as an indicator of the borrowing the government needs to undertake.
Meanwhile, India’s GDP growth slumped to its lowest level in seven quarters at 5.4 percent in the second quarter of FY25, as mining growth contracted to an eight quarter low and manufacturing and utility services took a hit. In the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) meeting last month, Governor Shaktikanta Das forecasted 7 per cent growth for Q2.
Infrastructure Sector Growth
The output of eight key infrastructure sectors expanded by 3.1 percent in October 2024, sharply down from a 12.7 percent growth registered in the same month last year, according to official data released on November 29, 2023. On a monthly basis, the production growth of these sectors was higher than the 2.4 percent expansion recorded in September 2024.
The growth of core sectors -- coal, crude oil, natural gas, refinery products, fertiliser, steel, cement and electricity -- was 4.1 percent during April-October this fiscal. It was 8.8 percent in the same period last fiscal. The eight core sectors contribute 40.27 percent to the Index of Industrial Production (IIP) which measures overall industrial growth.