Notable Reduction in Fiscal Deficit

• 05 Aug 2024

In August 2024, the Centre announced that it has achieved a notable reduction in its fiscal deficit, recording Rs. 1.4 lakh crores in Q1 FY25, which is only 8.1% of the budget estimate, significantly improving from the previous year's 25.3%.

• The fiscal deficit for Q1 FY25 was Rs. 1.4 lakh crores, amounting to just 8.1% of the budget estimate, a sharp improvement from 25.3% in Q1 FY24.
• The government's revenue receipts grew by 41% year-on-year to Rs. 8.3 lakh crores, contributing significantly to the reduced fiscal deficit.
• Gross tax revenue rose by 23.7%, with direct taxes increasing by 39.9% to Rs. 4.6 lakh crores, driven by a 49.9% surge in income tax collections.
• Indirect tax collections increased by 7.9% to Rs. 3.7 lakh crores, with GST collections up by 10.6% to Rs. 2.3 lakh crores, although customs and union excise duties fell.
• Government spending in Q1 FY25 reached 20.4% of the targeted expenditure, slightly lower than the 23.3% achieved in the same period last year.
• Capital expenditure was subdued at 16.3% of the budget estimate, down from 27.8% in the previous year, while revenue expenditure remained stable at nearly 22%.
• Government subsidies accounted for 24% of the budget estimate, with a notable increase in food subsidies to 30% of the BE, though petroleum subsidies dropped to 3%.