Fiscal deficit in April-May narrows to 3% of FY25 target

India's fiscal deficit stood at ₹50,615 crore for April and May months of the current financial year 2024-25, which is 3% of the actual budget estimates for the whole year vs 11.8% in April, the latest government data shows.

The revenue receipts stood at ₹5,70,758 crore, 19% of the FY25 budget estimates. The net tax revenue stood at ₹3,19,036 crore, 12.3% of the actual estimates for the whole year vs ₹2,78,000 lakh in the same period last year, according to the Controller General of Accounts data.

The total expenditure was recorded at ₹6,23,460 for the said period, 13% of the budget estimates for FY25. The capital expenditure came in at ₹1,43,625 crore, about 12.9% of the total budget estimates for FY25.

The government had restrained the FY24 fiscal deficit to 5.6% of GDP, lower than its 5.8% target set out in the budget, with a total quantum less by ₹81,100 crore than the revised estimate (RE).

This was driven by higher-than-expected revenue receipts (₹28,700 crore) while expenditure was lower (-₹46,900 crore). Positively, the government nearly utilised targeted capex, which is 99.9% of the revised estimate with 29% YoY growth.

The Centre’s FY25 fiscal deficit target stands at 5.1% of GDP and 4.5% by FY26. "We expect the government to further surprise with the fiscal numbers in FY25 as RBI dividend came in double of the budgeted target and revenue receipts should remain buoyant. Full budget in July will shed light on whether more than expected receipts via dividend will be utilised in lowering borrowing or expanding capex," brokerage PhillipCapital said in its note this month.

The gross tax revenue, meanwhile, overshot the revised estimates by ₹27,600 crore, with direct and indirect tax growth of 18% and 8% YoY, respectively; income tax growth of 25%; and corporation tax growth of 10%. The GST and customs duty rose 13% and 9%, respectively. However, the excise duty and service tax declined by 4% and 2%, respectively.

Core sectors grow 6.3% in May

The combined index of eight core industries (ICI) increased 6.3% in May 2024 compared to May 2023. In the April month, the ICI had increased 6.7%. The production of electricity, coal, steel, natural gas and refinery products recorded positive growth in May 2024, the Ministry of Commerce & Industry says.

"The cumulative growth rate of ICI during April to May 2024-25 was 6.5 per cent (provisional) as compared to the corresponding period of last year," says the ministry, adding that the final growth rate of the index of eight core industries for February 2024 was 7.1%.

The ICI measures the combined and individual performance of production of eight core industries -- cement, coal, crude oil, electricity, fertilisers, natural gas, refinery products and steel. The eight core industries comprise 40.27% of the weight of items included in the IIP.