The report also noted that the capital expenditure of the government in the first seven months of the current fiscal stands at only 42 per cent and it will be a challenge for the government to spend the remaining 58 per cent in the remaining five months.
It said,”It would be a daunting task for the govt. to achieve the Rs 11.11 lakh crore budgeted target for the fiscal as the govt. has only five months left to spend the remaining 58 per cent of the full-year capex budget”.
Capital expenditure is crucial for long-term economic growth, it declined by 14.7 per cent during April-October FY25. Although the pace of decline eased in October, compared to the 15.7 per cent fall recorded in the first half of FY25.
The report says India’s fiscal deficit for the first seven months of the current financial year (April-October FY25) stands at Rs 7.51 lakh crore, which is 46.5 per cent of the Budget Estimate (BE).
It said “India’s fiscal deficit for Apr-Oct FY25 came in at Rs 7.51 lakh crore (46.5 per cent of BE) vis a vis Rs 8.04 lakh crore (45.0 per cent of BE) in corresponding period last year”.The report highlighted that while fiscal trends lagged behind historical patterns until September 2024, there was a noticeable improvement in October 2024, reflecting a strengthening fiscal impulse. This comes at a crucial time, as India’s GDP growth for Q2 FY25 slipped to 5.4 per cent, the lowest in seven quarters.The report added that the expenditure dynamics also showed a turnaround in October. While total expenditure growth during the first half of FY25 was negative at -0.4 per cent year-on-year, it surged by 31.7 per cent in October.
Revenue expenditure picked up by 41.9 per cent during the month, reversing the negative momentum seen earlier in the fiscal year. However, the quality of spending remains a concern, with a higher focus on revenue expenditure compared to capital expenditure (capex).
While fiscal dynamics have shown improvement, achieving the fiscal targets without compromising the quality of spending will remain a key challenge for policymakers in the months ahead.