India's Fiscal Health: 2024-25 Deficit Analysis | Budget Insights
India's Fiscal Deficit Trends: 2024-25 Budget Analysis
Published on: | Data source: Union Budget 2024-25 Documents
The 2024-25 Union Budget presents a mixed fiscal picture, with gradual deficit reduction but continued borrowing pressures. This analysis breaks down the key deficit metrics and financing sources through 2025-26.
2024-25 Budget Highlights
- Fiscal deficit target: 4.9% of GDP (2024-25 BE) reducing to 4.4% (2025-26 BE)
- Revenue deficit improvement: Down to 1.8% from 2.6% (2023-24)
- Market borrowings: ₹11.63 lakh crore planned for 2024-25
- Effective revenue deficit: Dramatic reduction to 0.6% of GDP
Deficit Components (₹ crore)
| Deficit Type | 2023-24 Actuals | 2024-25 BE | 2024-25 RE | 2025-26 BE | % of GDP |
|---|---|---|---|---|---|
| Fiscal Deficit | 16,54,643 | 16,13,312 | 15,69,527 | 15,68,936 | 5.6% → 4.4% |
| Revenue Deficit | 7,65,216 | 5,80,201 | 6,10,098 | 5,23,846 | 2.6% → 1.5% |
| Effective Revenue Deficit | 4,61,300 | 1,89,423 | 3,10,207 | 96,654 | 1.6% → 0.3% |
| Primary Deficit | 5,90,771 | 4,50,372 | 4,31,587 | 2,92,598 | 2.0% → 0.8% |
Deficit Trends (% of GDP)
Projected improvement across all deficit metrics through 2025-26
Financing the Fiscal Deficit
Breakdown of how the government plans to fund its ₹15.69 lakh crore deficit in 2024-25:
| Source | 2023-24 Actuals | 2024-25 BE | 2024-25 RE | 2025-26 BE |
|---|---|---|---|---|
| Debt Receipts (Net) | 16,53,849 | 14,72,915 | 15,17,576 | 15,66,452 |
| Market Borrowings (G-sec) | 11,77,754 | 11,63,182 | 11,62,678 | 11,53,834 |
| Short term Borrowings | 53,205 | (-)50,000 | (-)1,20,000 | 0 |
| Securities against Small Savings | 4,51,399 | 4,20,063 | 4,11,872 | 3,43,382 |
| State Provident Funds | 5,059 | 5,000 | 5,000 | 5,000 | s
| External Debt | 55,121 | 15,952 | 31,992 | 23,490 |
Financing Sources Composition
Market borrowings continue to dominate deficit financing (74% share in 2024-25)
Key Observations
Positive Developments
- Fiscal consolidation: Deficit reduction path maintained despite election year
- Revenue deficit control: 1.8% target shows commitment to quality spending
- Reduced reliance on short-term borrowing: Negative figures indicate repayment
Potential Concerns
- High gross borrowings: ₹11.63 lakh crore could crowd private sector
- Optimistic revenue assumptions: 12% nominal GDP growth factored in
- Declining small savings: Down 16% in 2025-26 BE
2025-26 Budget Projections
| Parameter | 2024-25 RE | 2025-26 BE | Improvement |
|---|---|---|---|
| Fiscal Deficit (% GDP) | 4.8% | 4.4% | 0.4% points |
| Primary Deficit (₹ cr) | 4,31,587 | 2,92,598 | 32% reduction |
| External Borrowing (₹ cr) | 31,992 | 23,490 | 27% lower |
What This Means for Investors
The continued fiscal consolidation should support bond markets and contain inflationary pressures. However, high gross borrowings may keep 10-year G-sec yields elevated in the 7-7.5% range through 2025.
Data Sources & Methodology
All figures sourced from Union Budget 2024-25 Documents, Table 2 (Deficit Indicators) and Table 4 (Financing of Fiscal Deficit). GDP percentages calculated using Budget's nominal GDP projections.
Note: BE = Budget Estimates; RE = Revised Estimates
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