The government would still be able to contain its 2024-25 fiscal gap at the targeted 4.9% of gross domestic product, as the deficit remains under control, experts said. A potential drop in 2024-25 capital spending from the targeted ₹11.11 lakh crore would also help, they reckoned.
In absolute terms, the deficit stood at ₹7.51 lakh crore up to October this fiscal, lower than ₹8.04 lakh crore a year earlier.
This was mainly because the deficit earlier in the year remained low when the resource mop-up was strong and government spending was undermined by the general elections.
Fiscal deficit in October alone spiked 171% from a year before to ₹2.76 lakh crore, partly aided by a double tranche of devolution to states that weighed down the Centre’s net tax growth for the month.
The deficit had widened in August on the back of a post-poll spurt in revenue spending, but it shrank again in September.Revenue spending spiralled almost 42% in October from a year before to ₹3.11 lakh crore. However, capital spending contracted again by 8.4% to ₹51,579 crore.
Between April and October, revenue spending rose 8.7% on-year to ₹20.07 lakh crore, having moved faster than the full-year target of a 6.2% increase. Capex, however, moderated by 14.7% in these seven months to ₹4.67 lakh crore, as project planning and executions got hit-first by the general elections in the June quarter and then by heavy monsoon rains.
Meeting the FY25 capital spending target would now entail a sharp 61% jump in the next five months of this fiscal from a year before.
The government’s major subsidy payout (on account of food, fertiliser and fuels) in the first half touched 65% of the annual estimate, compared with 62% a year earlier.