FY25 Fiscal Gap May Be Lower Than Budgeted

Key Points

- The Centre has increased its outlay on interest-free capex loans to Rs 15 trillion for FY25 from Rs 13 trillion in FY24. - Direct tax collections are projected to exceed the target by a decent margin in FY25. - The government has reduced its fiscal deficit target for FY25 to 4.9% of GDP from the interim budget target of 5.1%.

Outlook

Based on the current progress, North Block is expected to lower its fiscal deficit target for FY25 meaningfully in line with the post-Covid consolidation roadmap. However, the Centre's gross debt sales are likely to remain elevated.