Centre’s fiscal deficit at 52.5% of BE between April and November, capex at 46.2% of annual target

Last updated: December 31, 2024 5:04 pm

By MT HANNACH

3 Min Read

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The Centre’s fiscal deficit stood at 52.5 per cent of the full-year target between April and November 2024, with capital expenditure amounting to 46.2 per cent of the budget estimate of Rs 11, 1 lakh crore. Although the data released on Tuesday raises hopes of an improvement in the Centre’s fiscal performance, concerns remain that the investment target for FY25 may not be met.

According to official data, the Centre’s fiscal deficit stood at Rs 8.5 lakh crore or 52.5 per cent of the fiscal target of Rs 16.13 lakh crore by the end of November 2024. This was 6.6 % less than the fiscal deficit of Rs 9.1 lakh crore recorded in November 2023.

The Centre’s total revenue stood at Rs 18.94 lakh crore between April and November 2024, which was 59.1 per cent of the budget estimates for the financial year. Out of this tax revenue (net for the Centre) stood at Rs 14.43 lakh crore and non-tax revenue stood at Rs 4.27 lakh crore during the period. Non-borrowed capital inflows stood at Rs 23,953 crore between April and November this fiscal.

The total expenditure incurred by the Center was Rs 27.41 lakh crore, which was 56.9% of the BE. Of this, Rs 22.27 lakh crore was revenue expenditure while Rs 5.13 lakh capital expenditure.

Aditi Nayar, chief economist and head of research and outreach at ICRA, noted that capital expenditure showed a healthy expansion of 21 per cent, albeit on a modest base. However, the Centre’s investments need to increase by 65% year-on-year from December 2024 to March 2025 or register a monthly rate of Rs. 1.5 lakh crore, to meet FY 2025 BE, which seems increasingly intimidating, she said. “We fear that the investment target of Rs. 11.1 lakh crore for FY 2025 will be missed by a margin of at least Rs 1 lakh crore to Rs 1.5 lakh crore,” she said. added.

The anticipated failure to meet the investment target is expected to offset any shortfall due to disinvestment and taxes, as well as the impact of the recent additional subsidy demand. As a result, ICRA expects the fiscal deficit to be slightly lower than the FY2025 BE of Rs. 16.1 lakh crore or 4.9% of GDP.