India Meets Fiscal Deficit Target of 4.8% for FY 2024-25 Despite Revenue Shortfalls

In a notable achievement for fiscal management, the Government of India has successfully met its fiscal deficit target of 4.8% of GDP for the financial year 2024–25, even as total receipts came in slightly below expectations. This update was released by the Controller General of Accounts (CGA) on Friday, along with the provisional GDP estimates for the year.

Fiscal Deficit at ₹15.77 Lakh Crore, Matching Budget Target

The fiscal deficit—which represents the gap between total expenditure and total revenue—stood at ₹15.77 lakh crore in FY 2024–25. This amount translates to 4.8% of India’s GDP, in line with the government’s revised fiscal target.

This achievement comes in the context of the government’s broader fiscal roadmap to reduce the deficit over time. As per the Union Budget 2024–25, Finance Minister Nirmala Sitharaman had committed to lowering the fiscal deficit further to 4.4% of GDP in the current fiscal year 2025–26, aligning with the fiscal consolidation glide path.

Total Revenue at ₹30.78 Lakh Crore: 97.8% of Revised Estimate

The Centre’s total revenue in 2024–25, including tax, non-tax, and capital receipts, was ₹30.78 lakh crore, which is 97.8% of the revised budget estimates (RE).

This shortfall was primarily attributed to:

• A significant underperformance in miscellaneous capital receipts, and
• A slight dip in income tax revenue.

The government earned only ₹17,202 crore as miscellaneous capital receipts, just 52.1% of the revised projection. This category includes disinvestment proceeds, and data from DIPAM (Department of Investment and Public Asset Management) revealed that only ₹10,131.32 crore was raised through disinvestment in FY25, far short of expectations.

Tax Revenue: Corporate Tax Surpasses Estimate, Income Tax Falls Short

Net tax receipts totaled ₹24.99 lakh crore, achieving 97.7% of the revised estimate. A closer look at the tax data shows:

• Corporate tax collections were a bright spot at ₹9.87 lakh crore, 0.7% higher than the government’s projection.
• However, income tax collections amounted to ₹11.83 lakh crore, which was almost 6% lower than estimated.

This divergence reflects changing income patterns and possibly the impact of tax relief measures or slower individual income growth.

Expenditure Performance: Capex Overshoots, Revenue Spending Controlled

On the expenditure side, the government spent a total of ₹46.55 lakh crore in FY25—again, 97.8% of the RE.

• Capital expenditure (capex), crucial for asset creation and infrastructure development, stood at ₹10.52 lakh crore, which is 103.3% of the budgeted amount. This indicates a strong push towards long-term growth through investments in roads, railways, and public assets.
• In contrast, revenue expenditure—which includes recurring expenses like salaries, pensions, interest payments, and subsidies—was at ₹36.03 lakh crore, about 2.5% below estimates. This careful control on revenue spending contributed to keeping the deficit within limits.

Implications for Fiscal Policy and Economic Outlook

India’s ability to meet its fiscal deficit target amid revenue shortfalls highlights the government’s commitment to fiscal prudence and efficient public spending. It also suggests an adaptive budgeting strategy that prioritizes productive capital investments over excessive revenue expenditures.

With a clear target of 4.4% fiscal deficit in FY 2025–26, and ongoing efforts to boost tax compliance and divestment efficiency, the Centre appears on track to meet its medium-term fiscal consolidation goals, as envisioned in the Fiscal Responsibility and Budget Management (FRBM) framework.