Perils of overestimates: Balancing deficit targets with accurate estimates

The sharp downward revision in personal income-tax collections for 2024-25 was perhaps one of the main reasons for the government applying the brakes on its revenue expenditure

Is there a sense of déjà vu in the recently released provisional actual numbers for the Union Budget for 2024-25? These numbers were made public at the end of last month. A quick comparison of these provisional actual numbers with the revised estimate (RE) for 2024-25 shows that the problem of revenue overestimation has resurfaced — after a welcome break of four years.

 

Note that the RE of the Union Budget for a financial year is released about two months before that year ends. This release coincides with the presentation of the following year’s Budget. Thus, the RE of the