In the first quarter of FY2025, that is between April 1st to 30 June 2024, the fiscal deficit of the economy has narrowed down to 8.1% of the whole year’s estimated figure. In the last financial year, during the corresponding quarter, it was at 25.3%, which indicates a significant decrease in the economy’s fiscal deficit. As per official data, this decrease in the deficit has been primarily a result of the central bank’s dividend to the government and reduced capex during the election months this year.
Revenue and Expenditures
The fiscal revenue for the first quarter as per the Budget fiscal deficit data stood at ₹ 8.3 lakh crore which is 26.5% of the annual target. The revenue has increased compared to the previous year’s same quarter when it stood at 22.4% of the annual estimate. The taxes collected were ₹ 5.5 lakh crore which stood at 21% of the yearly estimate.
From income tax in the first quarter, the government collected ₹ 2.9 lakh crore, while from corporate taxes, it collected ₹ 1.7 lakh crore.
Coming to the expenditure, the capex expenditure of the government stood at 16.3% in the April-June quarter compared to the corresponding quarter of FY23 when capex expenditure was 27.8% of the annual estimates.
The total expenditure estimate for FY25 stands at ₹ 48.2 lakh crore, out of which the government has spent only 20% in the first quarter. Finally coming to the loans disbursed, the figure stands at ₹ 30009 crore, which is 17.5% of the entire year’s estimate.
Future Targets of Government
During the Budget announcement, the finance minister suggested that the fiscal deficit in India will be lowered further in the upcoming financial year. In FY26, the government expects to bring down the fiscal deficit to 4.5% of the GDP.
What does a decreasing fiscal deficit imply?
A decreasing fiscal deficit is a positive thing for an economy as it refers to the difference between the income earned by the government and its expenditures. The amount that a government has to borrow from outside can be referred to as a fiscal deficit. In FY2025’s first quarter, this deficit has come down to ₹ 1.36 lakh crore or 8.4% of the total fiscal deficit estimate for the year which is ₹ 16.13 lakh crore. When the fiscal deficit decreases, it means the government has to borrow less money from international sources like the IMF or other countries. This mainly indicates the growing self-dependence of the nation. However, while the dividend received from RBI has significantly helped the government to decrease the deficit, reduced capex expenditure means less investments and development of the country.
Source: https://www.cnbctv18.com/
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