(Reuters) – India could post a fiscal deficit for the current fiscal year of 4.7%-4.8% of gross domestic product (GDP), lower than the government’s estimate of 4.9%, driven primarily by lower spending, it said on Monday financial daily Mint.
Lower spending on planned capital investment and a higher-than-expected dividend from the central bank could lead to a smaller fiscal deficit, the report said, citing two people familiar with the matter.
The plan for fiscal year 2026 is to keep the budget deficit within the government’s target of 4.5%, the newspaper reported, citing one of the sources.
India’s budget gap stood at 5.6% of GDP in the fiscal year 2023-2024. Its financial year runs from April to March.
India’s finance ministry did not immediately respond to Reuters’ request for comment.
Through November, the government’s capital expenditure, or spending on building physical infrastructure, stood at 5.13 trillion rupees ($59.41 billion), or 46.2% of the annual target, up from 5.86 trillion rupees for the same period a year earlier .
Spending in the current fiscal year has been slow due to national elections and capital expenditures are unlikely to meet the annual target.
Dividend well above expectations of 2.11 trillion rupees from reserves Bank of India (NS:), which was announced last May and will be calculated in fiscal year 2025, will also help reduce the deficit, the report said.
($1 = 86.3310 Indian Rupees)
