New Delhi

ICRA projects that the Central government’s revenue receipts will be revised upwards by Rs 1.2 lakh crore in the upcoming Revised Budget for 2024-25 compared to the Interim Budget Estimate. Meanwhile, the increase in the revenue expenditure target is expected to be relatively modest, focusing largely on the rural economy. This optimistic outlook is supported by ICRA’s expectations of higher dividends from the Reserve Bank of India (RBI) and increased tax collections.

As a result, ICRA anticipates that the government will aim for a fiscal deficit target of 4.9-5.0% of GDP for FY2025, down from the interim budget’s target of 5.1%. This adjustment is expected to maintain the capital expenditure target at Rs. 11.1 lakh crore.

Furthermore, ICRA suggests a probable reduction in net market borrowings for FY2025 by Rs. 350-550 billion compared to the interim budget estimate of Rs. 11.8 lakh crore. This potential decrease in borrowing could positively impact yields and boost demand for government securities (G-secs), especially with their inclusion in the J.P. Morgan Government Bond Index.