Budget 2025 Highlights: Here's the latest on capex, fiscal deficit and debt

As Union Finance Minister Nirmala Sitharaman presented the Budget 2025, attention was focused on key financial indicators shaping India’s economic trajectory. From fiscal deficit to defence allocations, these figures reveal the government’s approach to balancing fiscal discipline with growth objectives. Given global uncertainties and domestic economic pressures, this year’s Budget carries significant weight for India’s recovery and long-term financial stability. Below is a detailed breakdown of the crucial numbers influencing the country’s financial strategy.

 

India’s Union Budget for FY26 has set total government expenditure at ₹50.65 trillion, marking an increase from ₹47.16 trillion in the revised estimates for 2024-25. The fiscal deficit target has been set at 4.4 per cent of GDP, down from 4.8 per cent in the previous year’s revised estimates, as the government moves forward with fiscal consolidation plans. Here are the key numbers:

 

 

Fiscal deficit

 

The fiscal deficit for the upcoming financial year (FY26) has been projected at 4.4 per cent of GDP. As part of its fiscal consolidation roadmap, the government had earlier aimed to bring this figure down to 4.5 per cent of GDP by FY26.

 

Capital expenditure

 

For FY26, the government has earmarked ₹11.21 trillion for capital expenditure. In the FY25 Budget, the initial allocation was ₹11.1 trillion, but due to delays in spending caused by the Lok Sabha elections, the revised estimates suggest a lower actual expenditure of around ₹10.18 trillion.

 

The effective capital expenditure, which also accounts for grants meant for capital asset creation, is estimated at ₹15.48 trillion. Additionally, ₹12.76 trillion has been allocated for interest payments, making it the largest expenditure component.

 

India’s debt levels

 

In her previous Budget speech, Sitharaman laid out a plan to ensure that central government debt follows a downward trend as a percentage of GDP from FY27 onwards. Financial markets will be looking for a more detailed fiscal consolidation strategy in FY26, particularly about achieving the 60 per cent debt-to-GDP target. As of FY24, the general government debt-to-GDP ratio stood at 85 per cent, with central government debt accounting for 57 per cent.

 

The government has increased its gross borrowing target for FY26 by 5.7 per cent to ₹14.82 trillion, up from the previous estimate of ₹14.01 trillion for FY25.

 

Revenue from tax

 

In the FY25 Budget, the government estimated gross tax revenue at ₹38.40 trillion, reflecting an 11.72 per cent rise from FY24. This includes ₹22.07 trillion from direct taxes (such as personal income tax and corporate tax) and ₹16.33 trillion from indirect taxes (including customs, excise, and GST).

 

Goods and Services Tax (GST) collections for FY25 are anticipated to grow by 11 per cent to ₹10.62 trillion. The revenue projections for FY26, pegged at 11.78 trillion (BE) will be closely monitored, especially as GST growth has slowed in recent months.

 

GDP growth numbers

 

The Economic Survey 2024-25, presented by Finance Minister Nirmala Sitharaman in the Lok Sabha on Friday, projects India’s economy to expand between 6.3 per cent and 6.8 per cent in the financial year 2025-26. This growth estimate aligns with the International Monetary Fund’s forecast of 6.5 per cent but falls short of the World Bank’s projection of 6.7 per cent. 

 

India’s nominal GDP growth for FY25 is estimated at 10.5 per cent, while real GDP growth is projected at 6.4 per cent. 

 

For FY25, the government expects to receive ₹2.33 trillion in dividends from the Reserve Bank of India (RBI) and financial institutions, along with ₹56,260 crore from central public sector enterprises (CPSEs). These non-tax revenue sources will be a key area of focus in the FY26 Budget.

 

Disinvestment and asset monetisation

 

The FY25 Budget set a target of ₹50,000 crore under miscellaneous capital receipts, which includes proceeds from disinvestment and asset monetisation. The FY26 Budget will outline new targets and may provide a broader strategy for monetising government assets.