Fiscal deficit in FY25: The projected gross fiscal deficit is likely to be around 5.4 per cent in FY25, as per the Emkay Global Financial Services. In its pre-budget note, Emkay said, “We expect the FY25 GFD/GDP to be pegged at 5.4 per cent, with an assumption of nominal GDP of 10.3 per cent.”

According to the note, the government of India may have to show a sharper pace of consolidation if the FY26 goalpost of 4.5 per cent is to be met amid debt sustainability. 

Thus, a higher nominal GDP growth assumption by the GoI may add a mild buffer to their fiscal accounting as a per cent of GDP. “We model FY25E GFD/GDP at 5.4 per cent ( Rs 17.85 trillion), following 5.9 per cent (Rs17.4 trillion) in FY24E, with gross tax revenue growth assumed to be mostly in line with the nominal GPP growth after a robust 12 per cent in FY24 estimated,” the note stated further. 

Non-Tax Revenue

The pre-budget memorandum also talked about the subdued non-tax revenues even in FY25. The document added, “Non-tax revenues are likely to fall, unless matched by higher RBI dividends similar to FY24, while divestment proceeds are likely to be pegged conservatively at Rs 350-400 billion.”. 

As far as the overall expenditure is concerned, Emkay added that they assume the overall expenditure growth at 5.2-5.3 per cent, with the proportion of revex to capex further improving. 

As per the Emkay, the vote-on-account will see policymakers seek permission from the Parliament to cover crucial expenditures until the general elections, a few measures might still be proposed.