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India holds FY25 fiscal deficit at 4.8% of GDP as RBI dividend builds FY26 buffer

Higher nominal GDP paired with restrained revenue outlays helped contain the FY25 shortfall, with record central bank transfers providing fiscal space for a 4.4% deficit target in FY26.

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Overview

  • India’s FY25 fiscal deficit held at 4.8% of GDP, equating to ₹15.77 lakh crore—just above the revised estimate but in line with official targets.
  • Nominal GDP rose to ₹330.68 lakh crore in FY25, surpassing projections and underpinning the better-than-expected deficit ratio.
  • Revenue spending was curtailed at ₹36.04 lakh crore against a revised target of ₹36.98 lakh crore, while capital expenditure reached ₹10.52 lakh crore, topping the ₹10.18 lakh crore estimate.
  • The Reserve Bank transferred a record ₹2.69 lakh crore in dividends, freeing up an estimated ₹60,000–70,000 crore of additional fiscal headroom.
  • The Bank of Baroda projects that FY26’s fiscal headroom will enable New Delhi to meet unforeseen defence expenditures within the 4.4% deficit ceiling.