Government May Consider Lowering Fiscal Deficit Target Below 5.1%, Says Official

India may lower its fiscal deficit target to below 5.1% of GDP for the financial year 2025, a government official said on Friday.

The provisional fiscal deficit figure, which represents the difference between the government's expenditure and revenue, could allow the government to set an even lower target for the current fiscal, the official quoted above told media on the condition of anonymity.

The fiscal deficit for the financial year ending March 2024 reached Rs 16.53 lakh crore, which is 5.63% of the gross domestic product, according to provisional data released by the Controller General of Accounts.

This figure is slightly better than the 5.8% estimated in the budget. The Union government's fiscal deficit expanded to 95.3% of the budgetary target for the previous fiscal.

A recent surplus transfer from the Reserve Bank of India is expected to ease fiscal pressure, moving the government closer to its fiscal deficit glide path of 4.6% of GDP by March 2026.

The official highlighted that a forecast of a normal monsoon bodes well for the agricultural sector, and that domestic economic activity remains resilient, supported by strong investment demand and positive business and consumer sentiment.

Earlier in the day, S&P Global stated that, according to the consolidation roadmap, the fiscal deficit is projected to decrease to 4.5% of GDP by March 2026, from an estimated 5.1% at the end of March 2025.

India's economic growth surpassed expectations in the fourth quarter of fiscal 2024, driven by industrial expansion and higher capital expenditure. The GDP grew by 7.8% in the January-March quarter, with an estimated full-year growth of 8.2%, according to the government's statistical office.