The Union government appears to be getting steadily better at budgeting, with actual spending and receipts converging closer to Budget Estimates (BE) over time, a Moneycontrol analysis of Union Budget data shows. The trend points to improved forecasting accuracy and tighter fiscal management, even amid heightened uncertainty in the post-pandemic period.
A comparison across three distinct phases—FY10–14, FY15–19 and FY20–25—shows a clear improvement in headline aggregates such as revenue receipts, tax collections and total expenditure.
During FY20–25, revenue receipts averaged 99.7 percent of BE, a sharp improvement over 96.3 percent in FY15–19, and broadly in line with 98.8 percent in FY10–14. The convergence is even more pronounced in net tax revenue to the Centre, where actual collections averaged 98.9 percent of BE in FY20–25, compared with 98.0 percent in FY15–19 and 97.2 percent in FY10–14.
The improvement suggests fewer large forecasting errors in recent years, despite disruptions from inflation shocks, global growth slowdowns and volatile commodity prices.
Spending accuracy improves
On the expenditure side, accuracy has also improved meaningfully. Total expenditure during FY20–25 averaged 103.9 percent of BE, compared with 97.6 percent in FY15–19, when undershooting was more common. While FY10–14 showed near-perfect alignment at 100.1 percent, that period was marked by greater year-to-year volatility.
Revenue expenditure followed a similar pattern. Actual spending averaged 105.0 percent of BE in FY20–25, compared with 97.5 percent in FY15–19 and 101.4 percent in FY10–14. While the recent period still shows mild overshooting, it is far less pronounced than during crisis years such as FY21 and FY22.
Interest payments, typically among the least flexible budget items, remained tightly controlled across all periods, averaging 97.2 percent of BE in FY20–25—broadly consistent with earlier years.
Volatility narrows after the pandemic
Year-wise data highlights how volatility has narrowed. In FY21, the pandemic caused revenue receipts to collapse to 80.9 percent of BE, while capital receipts surged to 183.7 percent, reflecting emergency borrowing. Since then, alignment has steadily improved.
By FY24 and FY25, most major aggregates clustered close to the 100-percent mark. In FY25, revenue receipts reached 98.7 percent of BE, tax revenue 99.0 percent, and total expenditure 97.8 percent. Borrowings, which had ballooned to 228 percent of BE in FY21, moderated sharply to 97.3 percent in FY25.
What this signals
The narrowing gap between Budget Estimates and actual outcomes reflects gains in revenue forecasting, expenditure control and mid-year recalibration through revised estimates. It also points to a more cautious approach to volatile components such as non-tax revenue and capital receipts.
While shocks can still disrupt projections—as seen during FY21–FY22—the broader trajectory suggests that India’s Budget process is becoming more predictable and credible, reducing the need for large mid-year corrections and strengthening fiscal transparency.
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