India’s fiscal deficit narrows to Rs 13.5 lakh crore in April - Feb of FY25

New Delhi: The central government’s fiscal deficit narrowed to Rs 13.5 lakh crore in April-February period of the financial year 2024-25, which is 85.8 per cent of the full year target, against Rs 15 lakh crore recorded in the corresponding period of the previous year, as per official data released on Friday.

Total expenditure incurred by the Government of India in the first 11 months of the current financial year stood at Rs 38.93 lakh crore, out of which Rs 30.81 lakh crore was on revenue account while Rs 8.11 lakh crore was on capital account.

This indicates that the government’s capital expenditure may fall short of the target. Originally the capital expenditure for the current financial year was budgeted at Rs 11.11 lakh crore. In the February budget it was revised downward to Rs 10.2 lakh crore. This means the centre will have to spend Rs 2.1 lakh crore in March to meet the revised capital expenditure target.

After rising by a healthy 51 per cent year-on-year in January, the capital expenditure contracted by a sharp 35.4 per cent in February. The Government of India’s capex needs to expand by 45 per cent year-on-year to touch Rs 2.1 lakh crore in March to meet the FY2025 RE, which appears to be a tall ask, said Aditi Nayar, Chief Economist at ICRA.

Out of the total revenue expenditure in April-February period Rs 9.52 lakh crore went for interest payments while Rs 3.63 lakh crore was spent on major subsidies.

The Government of India has received Rs 25.46 lakh crore in the first 11 months of the current financial year, as per monthly review of the accounts released by the Union Finance Ministry.

Gross tax collections increased by 11 per cent on a year-on-year basis, aided by the 22 per cent expansion in income tax collections even as corporate tax collections rose by just 2 per cent during this period.

While income tax collections need to rise by 6 per cent in March 2025 to meet the FY2025 RE, corporate tax collections are required to grow by a steep 34.4 per cent in the month in YoY terms, albeit only 16 per cent higher than the collections seen in March 2023.