The government is focused on improving the quality of public spending, strengthening the social safety net, and reducing the fiscal deficit to 4.5 percent of GDP by FY26, according to a finance ministry report.
Finance Minister Nirmala Sitharaman will present the Budget for the financial year 2025-26 in Parliament on February 1.
The Union government remains committed to following the fiscal consolidation path outlined in the FY 2021-22 Budget, with the goal of bringing the fiscal deficit below 4.5 percent of GDP by FY 2025-26, according to finance ministry statements on the half yearly review of the trends in receipts and expenditure and deviation in meeting the obligations of the government under the Fiscal Responsibility and Budget Management Act, 2003.
This review also examined any deviations from the Fiscal Responsibility and Budget Management Act, 2003. The statements were presented in the Lok Sabha last week.
The report highlights that the focus will be on improving the quality of public spending while strengthening the social security system for vulnerable groups. This approach is expected to enhance the country’s macroeconomic fundamentals and maintain overall financial stability.
The statements note that the Budget for 2024-25 was formulated amid global uncertainties, including the ongoing conflicts in Europe and the Middle East. However, India’s strong macroeconomic fundamentals have shielded the country from global economic turmoil, allowing it to continue pursuing growth while maintaining fiscal discipline.
“It has also helped the nation pursue growth with fiscal consolidation. As a result, India retains its pride of place as one of the fastest growing economies in the world. However, risks to growth still remain,” it said.
The total estimated expenditure for FY 2024-25 is about Rs 48.21 lakh crore, with Rs 37.09 lakh crore allocated for revenue and Rs 11.11 lakh crore for capital expenditure, as per the Budget Estimate (BE). In the first half of FY25, the government spent Rs 21.11 lakh crore, approximately 43.8 percent of the BE.
When including grants for capital asset creation, the effective capital expenditure (capex) was projected at Rs 15.02 lakh crore. Gross Tax Revenue (GTR) was estimated at Rs 38.40 lakh crore, yielding a tax-to-GDP ratio of 11.8 percent.
The Centre’s total non-debt receipts were estimated at Rs 32.07 lakh crore, consisting of Rs 25.83 lakh crore in net tax revenue, Rs 5.46 lakh crore in non-tax revenue, and Rs 0.78 lakh crore in miscellaneous capital receipts.
Based on these estimates, the fiscal deficit for FY 2024-25 was projected at Rs 16.13 lakh crore, or 4.9 percent of GDP. In the first half of FY25, the fiscal deficit was estimated at Rs 4.75 lakh crore, or about 29.4 percent of the full-year estimate.
The fiscal deficit is planned to be financed through Rs 11.13 lakh crore raised from the market (Government Securities and Treasury Bills) and the remaining Rs 5 lakh crore through other sources such as the National Small Savings Fund (NSSF), State Provident Fund, external debt, and the drawdown of cash balances.