Datanomics: Govt betters fiscal deficit target despite lower tax receipts

The credit goes to higher GDP in nominal terms than considered by the Budget

The Union government received lower tax revenues than projected in the Budget (Revised Estimates) but did not compromise on capital expenditure for 2024-25. Yet, it managed to improve upon its fiscal deficit target as a proportion of gross domestic product (GDP), thanks to nominal GDP turni­­­­ng out higher than what the Budget had assumed. 

Revenues disappoint

 

The government got higher receipts than projected in the Revised Estimates for FY25 only under non-tax revenues head, thanks to ₹2.11 trillion surplus transfer from the RBI. On the expenditure side, the axe fell on revenue head, unlike the normal practice of cutting capital expenditure to check the fiscal deficit 

 

FY25 fiscal maths

 

The government’s fiscal deficit was around ₹8,000 crore higher than estimated in the FY25 Budget. However, as a proportion of GDP, it was 0.07% lower than estimated, as the economy’s size was ₹6.57 trillion higher than assessed in the first advanced estimates of national income