Budget 2024: India's fiscal deficit to be budgeted at 5.3 pc of GDP in FY25, says BofA Securities

Budget expectations: Finance Minister Nirmala Sitharaman will opt for a further reduction in fiscal deficit to 5.3 per cent of India's gross domestic product in the upcoming budget for FY25 despite poll pressure, a foreign brokerage said on Friday. The government will meet the FY24 commitment to reduce the important number to 5.9 per cent, BofA Securities said in a note.

"We see Centre's fiscal deficit to consolidate further to 5.3 per cent of GDP, despite poll pressure," its analysts wrote in a note.

The government will opt for continuing with its strategy of consolidating fiscal deficit through capital expenditure driven growth instead of expenditure compression, it said.


The brokerage said digitization-led formalization has aided the fiscal math through tax buoyancy on one side and reducing wasteful expenditure (subsidy leakage) on the other.

The government had earlier committed to reduce the fiscal deficit to 4.5 per cent by FY26 as part of its glide path to gradually reduce the gap, which is seen as a major factor influencing macroeconomic position.

Checkout LIVE BUDGET COVERAGE

The brokerage estimated a 10.5 per cent growth in the revenue receipts at Rs 30.4 lakh crore, which will be led by a 10 per cent increase in tax revenue and 14 per cent jump in non-tax revenue.

It also said that there will be a "modest increase" in the divestment proceeds in the new fiscal.

Fresh market borrowings in FY25 will come at Rs 11.6 lakh crore, and given maturities of debt worth Rs 3.61 lakh crore in FY25, the gross market borrowings are estimated at Rs 15.2 lakh crore, it added.

Budget FAQs

What is the government's commitment regarding fiscal deficit reduction?
The government has committed to reduce the fiscal deficit to 4.5 per cent by FY26.

What is the strategy for consolidating fiscal deficit?
The government will opt for consolidating fiscal deficit through capital expenditure driven growth instead of expenditure compression.

Will there be an increase in divestment proceeds in the new fiscal?
There will be a modest increase in the divestment proceeds in the new fiscal, according to BofA.