Key facts
- India is reportedly preparing to allow its fiscal deficit to widen to 4.8% of GDP for the current financial year.
- This figure exceeds the 4.3% target set in February.
- Rising energy subsidy costs due to the war in Iran are a primary driver of the potential deficit increase.
- The government met its fiscal deficit target of 4.8% for the financial year 2024-25.
- Total revenue for FY25 was ₹30.78 lakh crore, while total expenditure was ₹46.55 lakh crore.
- The government has set a fiscal deficit target of 4.4% for the upcoming financial year 2025-26.
India is reportedly preparing to allow its fiscal deficit to widen to 4.8% of GDP for the current financial year, exceeding the 4.3% target set in February. This potential increase is attributed to rising energy subsidy costs driven by the war in Iran and pressure on government finances. The Ministry of Finance has reportedly reassured credit rating companies that any deterioration in public finances would be due to the uncertain global environment rather than a shift in fiscal discipline.
Data released by the Controller General of Accounts shows the government met its fiscal deficit target of 4.8% for the financial year 2024-25, with total receipts at ₹30.78 lakh crore and total expenditure at ₹46.55 lakh crore. The fiscal deficit stood at ₹15.77 lakh crore.
For the upcoming financial year 2025-26, the government has set an ambitious fiscal deficit target of 4.4% of GDP. This aligns with the broader objective of reducing the debt-to-GDP ratio to 50% by March 31, 2031, from the current level of 57.1%.