The FY 25 Final Budget once again reaffirms continuity in government policy, so well maintained over the last ten years. Against the global trend of widening fiscal deficits and increasing debt burden, India has remained on the course of fiscal consolidation. Once again, the policy is focused on under promising and overdelivering. Thus, there is scope for India to achieve its FY26 fiscal deficit target much earlier.

Highlights

• The Budget targets a fiscal deficit of 4.9% for FY25BE, lower than the 5.1% targeted for FY25 in the Interim Budget in February 2024.
• The Budget has stuck to its commitment to a fiscal glide path of 4.5% in FY26.
• Government Capex as % of GDP has doubled over the last four years. At the same time, subsidies as % GDP have fallen by 2/3rd over the same period.
• S&P Global Ratings upgraded India's sovereign credit rating outlook, after a gap of 13 years, from ‘stable’ to ‘positive’ on the back of robust economic growth, sound economic fundamentals, and improved composition of government spending.