Union Budget 2025 projects 4.4% fiscal deficit for FY26, with Rs 11.21 lakh crore allocated for capital expenditure
Chennai: The government has managed to remain committed to its glide path towards fiscal consolidation by projecting 4.4 per cent fiscal deficit for FY26. It has allocated Rs 11.21 lakh crore towards capital expenditure.
In the last year of the 15th Finance Commission cycle and as committed in the Budget speech of FY22, glide path for fiscal consolidation the fiscal deficit is expected to be below 4.5 per cent of GDP in FY26.
The fiscal deficit to GDP ratio is estimated to be 4.4 per cent in FY26 as against 4.8 per cent in RE of FY25. Similarly, the revenue deficit is estimated at 1.5 per cent of GDP in FY26 against 1.9 per cent in RE FY25.
However, the fiscal deficit is projected at Rs 15.69 lakh crore, just slightly lower than Rs 15.70 lakh crore in RE FY25.
“In the July Budget, I had committed to staying the course for fiscal consolidation. Our endeavour will be to keep the fiscal deficit each year such that the Central Government debt remains on a declining path as a percentage of the GDP,” the Finance Minister said.
The total receipts other than borrowings are projected to be Rs 34.96 lakh crore and the total expenditure Rs 50.65 lakh crore. The net tax receipts are estimated at Rs 28.37 lakh crore.
To finance the fiscal deficit, the net market borrowings from dated securities are estimated at Rs 11.54 lakh crore and gross market borrowings Rs 14.82 lakh crore. The balance financing is expected to come from small savings and other sources.
The Revenue Deficit is estimated at 1.5 per cent of GDP against 1.9 per cent in RE FY25. Gross tax revenue is estimated at Rs 42.70 lakh crore, 10.8 per cent higher than RE FY25. Of this, direct taxes are Rs 25.20 lakh crore and indirect taxes Rs 17.40 lakh crore
The Budget has allocated Rs 11.21 lakh crore or 3.1 per cent of GDP towards capital expenditure, up 0.9 per cent from FY25. Along with grants, effective capital expenditure is estimated at Rs 15.48 lakh crore or 4.3 per cent of GDP.
“By sticking to the glide path, the domestic macroeconomy will send the right message to global investors, multilateral institutions and the global rating agencies,” said Manoranjan Sharma, Chief Economist at Infomerics Ratings.
