Fiscal Deficit Hits 46.5% of FY25BE

• The central government’s fiscal deficit reached to 46.5% of the annual target, which is 1.5% higher as compared to 45% a year ago.
• Revenue expenditure rose for a third consecutive month through October, while net tax mop-up growth remained subdued.
• Experts predicted the government can contain its 2024-25 fiscal gap at 4.9% of gross domestic product.

Revenue Expenditure

• Revenue expenditures are short-term expenses used in the current period or within a year.
• They cover ongoing operational expenses (OPEX) of running a business.
• Revenue expenditures include repairs, routine maintenance, repainting, and renewal costs.
• They are related to the government’s day-to-day operations and do not develop physical or financial assets.

Types of Revenue Expenditures

• Plan and Non-plan expenditures are primarily government revenue expenditures, but also include capital spending.
• Non-Plan expenditures account for the majority of the government’s total spending.

Classification of Government Expenditures

• The government of India announced in 2016 that the classification of plan expenditure and non-plan expenditure would be abolished.
• The expenditures of the government will be reclassified as Capital and Revenue spending.
• The new capital and revenue spending classifications will establish a clear and effective link between government earnings, expenditures, and outcomes.