India’s Fiscal Deficit at 36.5% of Annual Target in First Half of FY25
India’s fiscal deficit remained well-contained at ₹5.73 lakh crore during April-September 2025, representing just 36.5% of the full-year budget estimate, according to government data released on Friday.
Key Financial Highlights
- Fiscal Deficit: ₹5.73 lakh crore (36.5% of annual target)
- Total Receipts: ₹17.30 lakh crore (49.5% of budget)
- Total Expenditure: ₹23.03 lakh crore (45.5% of budget)
- Revenue Receipts: ₹16.95 lakh crore
Revenue Breakdown
Tax revenue contributed ₹12.29 lakh crore while non-tax revenue stood at ₹4.66 lakh crore. The significant jump in non-tax revenue was largely driven by the Reserve Bank of India’s dividend of ₹2.69 lakh crore to the central government, up from ₹2.11 lakh crore last year.
Expenditure Trends
Government spending increased to ₹23 lakh crore during April-September 2025, compared to ₹21.1 lakh crore in the same period last year. This reflects higher investment in major infrastructure projects across highways, ports, and railways sectors.
Fiscal Deficit Target
The central government has set its fiscal deficit target at 4.9% of GDP for FY25, down from 5.6% in the previous fiscal year. A declining fiscal deficit strengthens economic fundamentals and supports growth with price stability.
Economic Implications
Reduced government borrowing leaves more funds available in the banking sector for corporate and consumer lending, which stimulates economic growth. According to a Bank of Baroda report, the strong fiscal position provides additional headroom for potential defence expenditures amid ongoing tensions with Pakistan following the Pahalgam terror attack and Operation Sindoor.
