India’s FY25 fiscal deficit meets target at 4.8% of GDP

India’s fiscal deficit in FY25 stood at 4.8 per cent of GDP in FY25, below the revised estimate of 4.8 per cent, data from the Comptroller General of Accounts showed on Friday.

The central government’s fiscal deficit stood at Rs 15.77lakh crore, or 100.5% of the revised annual target, compared with 95.4% a year before.

While announcing the federal budget this year, Finance Minister Nirmala Sitharaman revised the fiscal gap target down to 4.8% from 4.9% pegged in this fiscal year’s budget, likely aided by reduced spending on planned capital investments and a larger-than-expected central bank dividend.

In the Budget, the government stuck to its fiscal consolidation roadmap and set the fiscal deficit target for 2025-26 at 4.4%, in line with its goal of bringing the budget gap below 4.5% by fiscal 2026. This comes amid the possibility of increased spending and income tax rate cuts to stimulate consumption in an economy expected to see its slowest growth in four years.

The lower fiscal deficit target for 2025-26 was expected on hopes of strong tax collections, despite the government’s continued capex push that is crucial to shore up consumption and create jobs and help India achieve its aim to be world’s third largest economy by 2030.

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