India's April-November fiscal deficit at Rs 8.5 lakh crore or 52.5% of FY25 target

Government spending data for November

India’s fiscal deficit at Rs 8.5 lakh crore or 52.5 percent of the Budget target, crossed the halfway mark in the first eight months of the year, according to government data released on December 31.

Between April and November 2024, the deficit remained higher than the previous year’s spending figure of 50.7 percent, even as capex spending lagged last year's pace.

Despite a pickup, capex spending was at Rs 5.13 lakh crore or 46.2 percent of the budgetary goal of Rs 11.1 lakh crore, compared with 58.5 percent spent during the April-November period last fiscal.

"Revenue expenditure rose by just 1 percent YoY in the month of November 2024 whereas capital expenditure displayed a healthy 21 percent expansion, albeit on a modest base. The GoI’s capex needs to expand by 65 percent YoY in December 2024-March 2025 or record a monthly run rate of Rs. 1.5 trillion, to meet the FY2025 RBE, which appears increasingly daunting," said Aditi Nayar, chief economist, Icra.

The government spent 60.1 percent of its budgetary target compared with 59 percent spent in the previous year.

Revenue receipts have lagged last year's target, with net tax revenue collection at 55.9 percent, lower than the previous year.

"The anticipated miss in the capex target is expected to offset any shortfall on account of disinvestment and taxes, as well as the impact of the recent supplementary demand for grants. Accordingly, ICRA expects the fiscal deficit to mildly trail the FY2025 RBE of Rs. 16.1 trillion or 4.9 percent of GDP," Nayar added.

With the FY26 Budget about a month away, industry bodies have asked the government to keep its foot on the gas regarding capex.

India’s economy is expected to do better in the third quarter after growth dipped to a seven-quarter low of 5.4 percent in Q2FY25. It will still not breach the 7 percent mark.

In their meeting with the finance minister on December 30, industry associations pushed for income tax cuts to boost consumption and continue with the capex thrust.

The Confederation of Indian Industry (CII) recommended raising the allocation for capex by 25 percent in the FY26 Budget. In contrast, the Federation of Indian Chambers of Commerce & Industry (Ficci) suggested a hike of 15 percent in the outlay.