FY25 Budget to Focus on Rural Economy, Capex, Fiscal Deficit Reduction
The higher-than-expected transfer from the RBI could boost non-tax revenue by ₹1.25 trillion, and gross tax revenue is anticipated to grow by 11% in FY25, adding up to a total upside of ₹1.4 trillion in overall revenue collection. This revenue growth is expected to help reduce the fiscal deficit target for FY25 to 5% of GDP.
CareEdge also projects higher nominal GDP growth for FY25 at 10.7%. Government borrowing is expected to decrease, with net borrowing between ₹11.2-11.4 trillion and gross borrowing between ₹13.6-13.8 trillion. Lower supply of G-secs and increased demand from India's inclusion in global bond indices may ease G-sec yields, with 10-year G-sec yields projected between 6.5-6.6% by the end of FY25.
The government's divestment plans have fallen short for five years, and achieving the FY25 target of ₹500 billion in miscellaneous capital receipts depends on undertaking significant divestments. Issues like procedural delays and pricing continue to hamper divestment efforts.
