A sharp reduction in capital expenditure (capex) during election months and record-high dividend from the Reserve Bank of India (RBI) led to a decrease in the central government’s fiscal deficit to 8.41 per cent of the full-year target for the April-June quarter (Q1) of 2024-25 (FY25), according to the latest data released by the Controller General of Accounts (CGA) on Wednesday, along with the most recent FY25 Budget figures.
However, CGA data, which uses Interim Budget figures, shows the Centre’s fiscal deficit stood at 8.1 per cent in Q1FY25.
In the corresponding period of 2023-24 (FY24), fiscal deficit was 25.3 per cent of the full-year target.
Aditi Nayar, chief economist at ICRA, notes that non-tax revenues expanded by 81 per cent due to the RBI dividend, amid a mild 2 per cent growth in revenue expenditure and a 35 per cent contraction in capex.
“The Centre’s capex was tepid at Rs 37,400 crore in June 2024, compared to Rs 1.1 trillion in June 2023. To meet the FY25 BE, Rs 9.3 trillion of capex needs to be incurred in the last three quarters of the year, a 39 per cent increase relative to the same period of FY24, which appears quite challenging,” she added.
Meanwhile, the tax revenue for the April-June 2024 period was Rs 5.5 trillion, or 21.1 per cent of BE, compared to 18.6 per cent in Q1 of the previous financial year.
The central government’s total expenditure in Q1 stood at Rs 9.7 trillion, or 20.4 per cent of BE. Of this, Rs 7.8 trillion was in the revenue account and Rs 1.8 trillion towards the capital account.
Fiscal deficit was 5.6 per cent of gross domestic product (GDP) in FY24. The government, in its Budget last week, projected fiscal deficit to decrease to 4.9 per cent of GDP in FY25.
First Published: Jul 31 2024 | 8:16 PM IST
