India’s H1 fiscal deficit at Rs 4.75 lakh crore, narrows to 29.4% of FY25 target

This was lower than 39.3% of the full-year target recorded during the same period last year.

The government aims to narrow the fiscal gap to 4.9% of GDP in this financial year from 5.6% a year earlier.

Revenue receipts totalled Rs 16.22 lakh crore, with tax revenue at Rs 12.65 lakh crore and non-tax revenue at Rs 3.57 lakh crore, equating to 49% and 65.5% of the budget estimate, respectively.

While tax revenue slightly narrowed from 49.8% in the previous fiscal period, non-tax revenue surged from 78.5%, largely due to the Reserve Bank of India’s (RBI) significant transfer of Rs 2.11 lakh crore to the government—more than double the initial budget forecast.

The revenue deficit stood at Rs 74,155 crore, or 12% of the annual target, a decrease from 26.6% in the same period last year.

In terms of expenditure, the government allocated around Rs 2.15 lakh crore to major subsidies, including food, fertilizer, and petroleum, reaching 56% of the budgeted target, slightly higher than last year’s 55% by the same time.

In her budget announcement, Finance Minister Nirmala Sitharaman set a fiscal deficit target of 4.9% of GDP for the fiscal year beginning April 1, down from the 5.1% projected in the interim budget.

The government remains committed to fiscal consolidation, aiming for a 5.1% deficit target next year despite demands for increased funding from coalition allies and calls from the middle class for tax relief.

Looking ahead to 2025-26, the government anticipates a reduced fiscal deficit driven by robust tax collections, despite a continued focus on capital expenditure aimed at bolstering consumption, job creation, and supporting India’s goal of becoming the world’s third-largest economy by 2030.