In 1st half, fiscal deficit at 29.4% of full-year target

India’s fiscal deficit at the end of the first half of the FY 2024-25 stood at Rs 4.75 lakh crore, 29.4% of the annual estimates, as per the government data.

The fiscal deficit was 39.3 per cent of the budget estimates for the corresponding period last year. Difference between the government’s total expenditure and revenue, fiscal deficit is an indication of the total borrowing that the government needs.

The Centre had reduced the fiscal deficit target to 4.9 per cent of the GDP for FY25 in the full Budget presented on July 23. Earlier, it was projected at 5.1 per cent in the interim Budget presented on February 1. The government has used extra dividends from the RBI to trim borrowings and provide additional funds for development schemes.

The dividend of Rs 2.11 lakh crore from the RBI as against the budget estimate of Rs 80,000-90,000 crore, has given an extra fiscal space of 0.4% of the GDP to the Centre to calibrate fiscal deficit reduction and provide for additional spending. In FY 2023-24, the fiscal deficit was 5.6 per cent of the GDP.