The Indian government's fiscal deficit for the first seven months of FY25 has reached 46.5% of its budget estimates, raising concerns about the achievement of capital expenditure targets. This figure translates to a deficit of ₹7.51 lakh crore, compared to ₹8.04 lakh crore during the same period last year.
Capital expenditure fell by 14.7% from April to October 2024, complicating long-term economic growth prospects. The government has only five months left to utilize the remaining 58% of its full-year capital expenditure budget of ₹11.11 lakh crore.
Despite a slight improvement in October, when total expenditure growth surged by 31.7%, the overall fiscal trends have lagged behind historical patterns. Revenue expenditure increased by 41.9% in October, but the focus remains on revenue rather than capital spending.
In a related development, the Indian government is implementing measures to achieve a GDP growth target of 6.5%-7% for FY25. Economic Affairs Secretary Ajay Seth expressed optimism for growth acceleration in the latter half of the fiscal year, despite a slowdown in the second quarter attributed to weaker manufacturing and consumption.