India’s fiscal deficit estimated at 5.8 percent of GDP in FY24

The general government’s gross market borrowings are expected to grow to Rs. 24.4 trillion in FY24, compared to Rs. 22.1 trillion in FY23.

Aided by robust direct tax collections and GST inflows, ICRA expects the Gori’s net tax receipts to overshoot the budgeted amount by a healthy Rs. 2.1 trillion in FY23. This, combined with expenditure savings to the tune of approximately Rs. 1 trillion along the lines seen over the last 5-6 years on an average, are expected to partly offset the sizeable net cash outgo announced in the First Supplementary Demand for Grants and the shortfall in non-tax revenues and disinvestment receipts. Consequently, ICRA expects the GoI’s fiscal deficit to print at Rs. 17.5 trillion in FY23, exceeding the budgeted amount of Rs. 16.6 trillion. However, a larger-than-estimated GDP would allow the fiscal deficit to remain at the budgeted target of 6.4 percent of GDP.

ICRA estimates the GoI’s gross tax revenues (GTR) in FY24 at Rs. 34 trillion, a YoY expansion of 9.4 percent (over projected level for FY23), with growth in direct taxes likely to outpace that in indirect taxes.
The ratings agency projects the GoI to target a double-digit growth in capital expenditure to approximately Rs. 8.5-9 trillion in FY24, relative to the level of Rs. 7.5 trillion, expected in FY23. In contrast, revenue spending is expected to rise by a relatively muted approximately 3 percent.

GoI is expected to place its net market borrowings in FY24 at Rs. 10.4 trillion, lower than Rs. 10.9 trillion in FY23. The total centre and state net dated market borrowings are estimated to rise to Rs. 17.2 trillion in FY24 from Rs. 16.5 trillion in FY23.