India's H1 fiscal deficit narrows to ₹4.75 lakh cr, 29.4% of FY25 target

India's fiscal deficit has narrowed to ₹4.75 lakh crore in the first half of the current fiscal year, representing 29.4% of the FY25 target, as revealed by the latest data by the Controller General of Accounts today.

This marks a significant improvement over the ₹7.02 lakh crore deficit recorded in the same period last year, driven by higher tax receipts, an early dividend payout by the Reserve Bank of India, and scaled-back capital spending amid election-related constraints.

The fiscal deficit target set for FY25 is 4.9% of the GDP, down from 5.6% last year and lower than the revised estimate of 5.8%.

The data released today reveals the Centre received ₹16.36 lakh crore, a little over half of the estimated receipts for the fiscal year 2024-25 up to September 2024.

Of the total receipts, over 77%, equivalent to net receipts of ₹12.65 lakh crore, originated from tax revenue to the Centre. Non-tax revenue contributed 21%, or approximately ₹3.57 lakh crore, derived from sources such as dividends from investments in public sector undertakings (PSUs), interest on loans, and fees for various services. A smaller share of nearly 1%, around ₹14,601 crore, came from non-debt capital receipts. These figures highlight the significant role of tax revenue in funding government operations, with non-tax sources and capital receipts supplementing this primary stream.

A third of the total receipts, amounting to ₹5.44 lakh crore, was allocated to state governments under the category of ‘Devolution of Share of Taxes by Government of India’. This transfer reflects an increase of nearly 20% over the corresponding period last year, marking an additional ₹89,359 crore compared to the previous year.

On the expenditure front, the central government incurred a total of ₹21.11 lakh crore, representing 43.8% of the budgeted estimates for the financial year 2024 to 2025. Of this expenditure, 80% or ₹16.96 lakh crore was allocated to revenue accounts, while the remaining 20% or ₹4.14 lakh crore was directed towards the capital account. Within the revenue expenditure, interest payments accounted for 30%, totalling ₹5.15 lakh crore, and 12% or ₹2.14 lakh crore was dedicated to major subsidies. These figures reflect the significant portion of expenses allocated to maintaining existing government obligations, with targeted funds supporting, both debt servicing and essential subsidies.

In the preceding month, the central government reported receipts totalling ₹12.17 lakh crore, accounting for 38% of the budget estimates for 2024 to 2025, covering receipts up to August. This amount comprised ₹8.73 lakh crore in tax revenue attributed to the Centre, ₹3.34 lakh crore in non-tax revenue, and ₹8,866 crore from non-debt capital receipts.