India’s Fiscal Deficit at 52.5% of FY25 Target, Capex Spending Lags Behind 

India’s fiscal deficit has reached ₹8.47 lakh crore in the first eight months of FY25, which is 52.5% of the full-year target, according to government data released on December 31. This is higher than the 50.7% recorded during the same period last year. 

Key Highlights from April-November FY25: 

– Fiscal Deficit: ₹8.47 lakh crore, or 52.5% of the budgeted target. 

– Revenue Deficit: ₹3.57 lakh crore. 

– Total Expenditure: ₹27.4 lakh crore. 

– Capex Spending: ₹5.13 lakh crore, or 46.2% of the ₹11.1 lakh crore target, down from 58.5% in the same period last year. 

The data reveals a slower pace in capital expenditure (capex) compared to FY24. Until October, capex spending stood at 42%, significantly below the 54.7% achieved in the previous fiscal. 

Industry Recommendations for FY26 Budget 

With the FY26 Budget just weeks away, industry associations are urging the government to maintain a strong focus on capex spending to stimulate economic growth. 

– Confederation of Indian Industry (CII): Suggested increasing capex allocation by 25% in the upcoming Budget to fuel infrastructure development and job creation. 

– Federation of Indian Chambers of Commerce & Industry (FICCI): Recommended a 15% hike in the capex outlay and called for income tax cuts to boost consumption. 

Economic Outlook 
India’s economic growth slowed to a seven-quarter low of 5.4% in Q2FY25, but a slight recovery is expected in the third quarter. However, the annual growth rate is unlikely to surpass 7%, underscoring the need for targeted fiscal measures. 

Government Focus Areas 

The government is likely to prioritize: 

1. Capex Boost: Accelerating infrastructure spending to ensure higher economic returns. 

2. Consumption Revival: Possible tax reforms to enhance disposable income and consumer spending. 

3. Fiscal Prudence: Balancing increased spending with fiscal discipline. 

As fiscal deficit levels edge higher and capex spending lags behind, the upcoming Budget will play a critical role in setting the tone for India’s economic trajectory in FY26.

RBI Governor Sees Stronger Growth in 2025

India’s new RBI Governor, Sanjay Malhotra, expects economic growth to improve in 2025, driven by strong consumer and business confidence. However, challenges such as geopolitical tensions, financial instability, and rising debt loom. Growth may slow to 6.6% in FY2025 from over 8% in recent years, impacting corporate profits and household income. The Financial Stability Report warns of gross NPAs rising to 3% by March 2026 but assures banks and NBFCs will maintain adequate capital levels despite risks to asset quality.