Capex shrinks as fiscal deficit reaches 52% of FY25 estimate: CGA data

The government’s capital expenditure in the April-November period of financial year 2024-25 (FY25) continued to contract with a 12.3 per cent decline year-on-year (Y-o-Y), according to data released by the Controller General of Accounts on Tuesday. The government has utilised 46.2 per cent of the Budget Estimates compared to 58.5 per cent last year, data showed.

 

Economists said the Centre’s capex needs to expand by 65 per cent Y-o-Y in December 2024-March 2025 or record a monthly run rate of Rs 1.5 trillion, to meet the FY25 target of Rs 11.1 trillion.

 

CGA data showed the central government exhausted Rs 8.5 trillion, or 52.5 per cent of the fiscal deficit target, in April-November FY25, which was 6.6 per cent lower than the Rs 9.1 trillion recorded in April-November FY24.

 

“The anticipated miss in the capex target is expected to offset any shortfall on account of disinvestment and taxes, as well as the impact of the recent supplementary demand for grants. Accordingly, ICRA expects the fiscal deficit to mildly trail the FY2025 revised budget estimate of Rs. 16.1 trillion or 4.9 per cent of GDP,” said Aditi Nayar, chief economist, ICRA India. 

 

Nayar said that FY25 capex target is likely to be missed by a margin of at least Rs 1.0-1.5 trillion.

 

Gross tax collections rose by 10 per cent Y-o-Y in November 2024, while net tax revenues grew by a marginal 0.5 per cent.

 

CGA data revealed that the government reached 56 per cent of the net tax revenue Budget Estimate for April-November FY25 against 62 per cent in the year-ago period. 

 

The income-tax collections expanded by 24 per cent Y-o-Y and corporate tax collections fell by 1 per cent.

 

“ICRA believes that income tax collections may surpass the FY2025 RBE of Rs. 11.5 trillion, unless large refunds are released in the latter part of the fiscal, while corporation tax inflows may print in line or slightly lower than the target,” Nayar said.  

 

Centre’s revenue expenditure rose by just 1 per cent Y-o-Y in November, reaching 60 per cent of the Budget Estimate in the first eight months of FY25 at similar levels of 59 per cent in the year-ago period.