Borrowing to build: Govt bets on capex as fiscal deficit stays on track

The budget holds the fiscal position, but importantly, government borrowing is now largely going into financing capex, as is evident in the effective revenue deficit estimated at 0.3% of GDP. The effective capital spending — Centre’s and capital grant to states — at ₹17.1 lakh crore is more than the fiscal deficit of ₹16.96 lakh crore, indicating an improvement in the quality of expenditure and the deficit. Put simply, borrowing is going into asset creation that will boost the economy’s growth potential.

CONSERVATIVE TAX REVENUE GROWTH

Net tax revenue, net to Centre (₹ lakh crore)
(% change)

• FY23: 21 (16.2%)
• FY24: 23.3 (10.9%)
• FY25: 25.0 (7.4%)
• FY26 (RE): 26.7 (7.0%)
• FY27 (BE): 28.7 (7.2%)

NON-TAX RECEIPTS

Dividends & profits / Non-tax revenue (₹ lakh crore)
(% change)

• FY23: 1.0 (–21.8%) | Non-tax: 2.9
• FY24: 1.7 (40.8%) | Non-tax: 4.0
• FY25: 3.1 (33.5%) | Non-tax: 5.4
• FY26 (RE): 3.8 (24.4%) | Non-tax: 6.7
• FY27 (BE): 3.9 (–0.2%) | Non-tax: 6.7

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AND ASSET SALES PROVIDE CUSHION

Disinvestment (₹ crore)

• FY23: 46,035
• FY24: 83,122
• FY25: 17,200
• FY26 (RE): 33,837
• FY27 (BE): 80,000

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AS CAPEX PUSH RESTARTS

Total capital expenditure (₹ lakh crore)
(% change YoY)

• FY23: 7.4 (8.7%)
• FY24: 9.5 (28.3%)
• FY25: 10.5 (10.8%)
• FY26 (RE): 11.0 (4.2%)
• FY27 (BE): 12.2 (11.5%)

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REVENUE SPENDING IS KEPT IN CHECK

Revenue expenditure (₹ lakh crore)
(% change)

• FY23: 34.5 (7.9%)
• FY24: 34.9 (1.2%)
• FY25: 36.3 (3.1%)
• FY26 (RE): 38.7 (7.4%)
• FY27 (BE): 41.3 (6.6%)

SPENDING RISES AT SLIGHTLY FASTER PACE…

Budget size (₹ lakh crore)

• FY23: 41.9 (10.5%)
• FY24: 44.4 (6.0%)
• FY25: 46.5 (4.7%)
• FY26 (RE): 49.7 (6.7%)
• FY27 (BE): 53.5 (7.7%)

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THOUGH LOWER SUBSIDIES PROVISION IS A RISK

Subsidy bill (₹ lakh crore)
(% of GDP)

• FY23: 5.8 (2.1%)
• FY24: 4.3 (1.4%)
• FY25: 4.2 (1.3%)
• FY26 (RE): 4.7 (1.3%)
• FY27 (BE): 4.5 (1.2%)

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FISCAL DEFICIT TARGETS ALMOST UNCHANGED

(% of GDP)

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DEBT BURDEN EASES TOWARDS TARGET

Central govt debt to GDP ratio (% of GDP)
(Note: Debts as defined in the FRBM Act)