India may record a fiscal deficit for the current fiscal year at 4.7%-4.8% of gross domestic product (GDP), lower than the government’s estimate of 4.9%, primarily driven by lower expenditure, finance daily Mint reported on Monday.
Lower spending on planned capital investments and a higher-than-anticipated dividend from the central bank could lead to a smaller fiscal deficit, the report said, citing two people aware of the matter.
The plan for fiscal year 2026 is to keep the budget deficit within the government’s target of 4.5%, the newspaper reported, citing one of the sources.
India’s budget gap stood at 5.6% of GDP in fiscal year 2023-2024.
Its financial year runs from April through March. India’s finance ministry did not immediately respond to Reuters’ request for comment.
Till November, the government’s capital expenditure, or spending on building physical infrastructure, was 5.13 trillion rupees ($59.41 billion), or 46.2% of the annual target, against 5.86 trillion rupees for the same period a year earlier.
The spending in the current fiscal year has been slow due to the national elections and capital expenditure is likely to fall short of the annual target.
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A sharply higher-than-expected dividend of 2.11 trillion rupees from the Reserve Bank of India, which was announced last May and will be accounted for in the fiscal year 2025, will also help reduce the deficit, the report said.
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