Fiscal deficit in 5 months hits 27% of FY25 target

Fiscal deficit in 5 months hits 27% of FY25 target



The Centre’s fiscal deficit in the first five months of 2024-25 stood at 27% of the annual target – lower than 36% a year ago – despite a spurt in August, showed the official data released on Monday.

The lower deficit indicates the government remains on track to meet its renewed target of containing the fiscal deficit at 4.9% of gross domestic product (GDP) in 2024-25. The Centre aims to reduce the gap further to less than 4.5% of GDP in 2025-26.

The fiscal deficit between April and August touched Rs 4.35 lakh crore, down from Rs 6.43 lakh crore a year before, thanks to a lower gap earlier in the year when the resource mop-up had remained strong while the government spending was constrained by the general elections.

The deficit in August, though, jumped four times to Rs 1.58 lakh crore from Rs 37,233 crore a year earlier, due to a post-election spurt in revenue spending and a moderation in the net tax mop-up.

Capital spending, however, faltered again in August by 30%, proving that the rebound in July after a tepid June quarter – when the general election had impacted such spending -to be short-lived.


Experts blamed heavy monsoon downpours in various parts of the country for faltering project executions in August.The capex target miss could provide “some cushion to absorb the shortfall on account of disinvestments and taxes,” said Aditi Nayar, chief economist at credit rating agency ICRA.



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