Capex recovers, fiscal deficit at 52.5% by Nov.

The Union Government’s fiscal deficit stood at about ₹8.5 lakh crore or 52.5% of the 2024-25 Budget estimates at the end of November, up from 46.5% a month ago. The fiscal gap was 6.6% below the April to November 2023 figures.

The Centre’s capital expenditure grew 21% in November after a weak trajectory between April and October, but the full year’s ₹11.11 lakh crore target may be difficult to attain, analysts believe.

“Total expenditure incurred by the Government of India (GoI) is ₹27,41,002 crore or 56.9% of the Budget estimate 2024-25, of which ₹22,27,502 crore is on Revenue account and ₹5,13,500 crore is on Capital account,” the Finance Ministry said in a statement citing data released by the Controller General of Accounts. Revenue expenditure was up 7.8%, while capital spending was 12.3% lower than a year ago.

“The GoI’s capex needs to expand by 65% year-on-year between December and March 2025, requiring a monthly run rate of ₹1.5 lakh crore to meet the Budget Estimate (BE), which appears increasingly daunting. We are apprehensive that the capex target will be missed by a margin of at least ₹1 lakh crore to ₹1.5 lakh crore,” said Aditi Nayar, chief economist at ICRA.

On the receipts front, the Centre had met 59.1% of its BE for the year with inflows of over ₹18.94 lakh crore, with a little over ₹14.43 lakh crore coming as tax revenue.

“While corporate tax collections have been tepid, falling by 1% in April-November, income tax collections have expanded by 24%, although these trends may have been partly distorted by the timing of refunds. Unless large refunds are released in the latter part of the fiscal, income tax inflows may surpass the BE of ₹11.5 lakh crore, while corporation tax inflows may print in line or slightly lower than the target,” Ms. Nayar reckoned.

The anticipated miss on the capex front would offset any shortfall on account of disinvestment and taxes, as well as the impact of the recent supplementary demand for grants, the ICRA economist said, estimating the full-year deficit to end up slightly lower than the 4.9% of GDP target for the year.

Between April and November this year, the Centre’s net tax revenues have risen by a marginal 0.5% compared to last year, and ICRA attributed this dampening to the additional devolution of taxes to the States. On the other hand, non-tax revenues expanded by around 50% boosted by a hefty dividend from the Reserve Bank of India, the agency noted.