India's Fiscal Deficit for FY25 Could Hit 4.7% to 4.8% of GDP -Mint

India is projected to experience a fiscal deficit of approximately 4.7% to 4.8% of its gross domestic product (GDP) for the current fiscal year, which is below the government's estimate of 4.9%. This reduction is primarily attributed to decreased spending, as reported by Mint on Monday. 

The report indicates that a decline in planned capital investments and an unexpectedly high dividend from the central bank may contribute to a narrower fiscal deficit, according to two sources familiar with the situation. 

For the fiscal year 2026, the government aims to maintain the budget deficit within its target of 4.5%, as mentioned by one of the sources. In the fiscal year 2023-2024, India's budget deficit was recorded at 5.6% of GDP, with the financial year running from April to March.

The finance ministry of India has not yet responded to Reuters' request for comments. 

As of November, the government's capital expenditure, which includes spending on physical infrastructure, reached 5.13 trillion rupees ($59.41 billion), accounting for 46.2% of the annual target, compared to 5.86 trillion rupees during the same period last year. 

The pace of spending this fiscal year has been sluggish due to national elections, and it is anticipated that capital expenditure will fall short of the annual goal. Additionally, a significantly higher-than-expected dividend of 2.11 trillion rupees from the Reserve Bank of India, announced last May and set to be recorded in fiscal year 2025, is expected to further alleviate the deficit.