The central government’s budget is shrinking, with declining TE/GDP ratios except for a COVID-induced spike in FY21. Post-pandemic, fiscal deficit reductions have come from expenditure cuts as revenue-GDP ratios stagnate or fall. Revenue shortfalls hindered fiscal consolidation. Minor revenue gains in FY23 and FY24 allowed for moderate expenditure cuts. The FY25 budget aims to cut the fiscal deficit by 0.7%. Despite optimism, tax buoyancy remains low, and disinvestment targets underperformed, influencing fiscal strategies. Non-tax revenue increases from public sector dividends are part of the strategy, but overall public sector capex remains flat, impacted by the BSNL bailout.
