Recalibrating spend

RBI paper redefines the capex-revenue debate

The government’s commitment to rein in the fiscal deficit and limit borrowing from abroad was re-emphasised in the Interim Budget earlier this month. A gross fiscal deficit of 5.1 per cent of gross domestic product (GDP) has been budgeted for in FY25, reflecting a consolidation of 71 basis points over FY24 (Revised Estimate). The tax-GDP ratio has also increased from 10.1 per cent in FY14 to 11.7 per cent in FY25 (Budget Estimate), along with improvements in tax-revenue buoyancy. At the same time, restrained growth in revenue expenditure, coupled with the impetus provided to capital expenditure, signifies that a greater