On June 28, Friday, the Controller General of Accounts (CGA) reported that India’s fiscal deficit for the first two months of the financial year 2024-25 amounted to 3% of the annual estimate. The fiscal deficit for April-May totalled Rs 50,615 crore.

During this period, the government’s revenue receipts exceeded its expenditure, resulting in a surplus of Rs 90,923 crore as per the Controller General of Accounts (CGA) data.

The government has set a fiscal deficit target of 5.1% of GDP for the current financial year. The government aims to reduce it to 4.5% by the end of 2025-26.

From April to May of the FY25 period, revenue receipts reached 19% of the budgeted estimates, up from around 15% in the corresponding period last year, due to increased tax revenue and the RBI dividend.

Government spending in this period was affected by the general elections.

In FY24, the fiscal deficit was Rs 16.54 trillion, compared to the budgetary target of Rs 17.86 trillion, as per government data. The Union government managed to contain the fiscal deficit at 5.6% of the gross domestic product (GDP) in 2023-24 (FY24), down from the Revised Estimates of 5.8%.

The Interim Budget released in February 2024 revised the fiscal gap estimate from the initial 5.9% of GDP to 5.8% for FY24.

Experts suggest that the RBI dividend windfall could provide the government with an additional leeway of Rs 1 trillion for increased expenditures or sharper fiscal consolidation.

S&P Global Ratings recently stated that it will closely monitor India’s fiscal consolidation path for the next two years and could consider a rating upgrade if the government stays committed to the fiscal glide path.