Central Government's Fiscal Deficit Eases to 3% Amid Lok Sabha Elections

The central government's fiscal deficit was at 3% of annual estimates by May-end 2024-25, a significant drop compared to 11.8% in the previous fiscal year. This improvement is noted amid the Lok Sabha elections and the model code of conduct limiting new projects. The government's target for the fiscal deficit in 2024-25 is 5.1% of GDP.

The central government's fiscal deficit narrowed down to just 3% of the annual estimates by the end of May 2024-25, a remarkable improvement from the 11.8% observed in the same period last financial year. This positive shift comes in the first two months of the new financial year, coinciding with the Lok Sabha elections and the enforcement of the model code of conduct, which restricts spending on new projects.

In the current fiscal year 2024-25, the government has pegged the fiscal deficit at 5.1% of GDP, equating to Rs 16,85,494 crore. Data from the Controller General of Accounts (CGA) highlighted that the fiscal deficit during April-May 2024 was Rs 50,615 crore, which is 3% of the Budget Estimates (BE). This compares favorably to the 11.8% recorded in the corresponding period of the previous fiscal.

Net tax revenue was robust at Rs 3.19 lakh crore or 12.3% of BE 2024-25, slightly higher than the 11.9% for the same period last year. Total expenditure by May-end 2024 stood at Rs 6.23 lakh crore or 13.1% of the fiscal's BE, down from 13.9% in the previous year. The fiscal deficit for the last year (2023-24) was contained at 5.6% of GDP, better than the previously estimated 5.8%, aided by higher revenue realization and lower expenditure. As per the Fiscal Responsibility & Budget Management (FRBM) Act, the government aims to bring down the fiscal deficit to 4.5% by 2025-26.

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