India's core sector grew 4.6% in Jan 2025, while fiscal deficit reached 74.5% of the annual target, driven by higher capex and revenue spending
New Delhi: The output of eight key infrastructure sectors rose by 4.6 per cent in January against a 4.2 per cent expansion in the same month of last year, but it was slower compared to 4.8 percent a month ago, while the Centre's fiscal deficit touched 74.5 per cent of the annual target at the end of January 2025, two separate government data showed on Friday.
The growth of core sectors — coal, crude oil, natural gas, refinery products, fertiliser, steel, cement and electricity — was 4.4 per cent during April-January this fiscal. It was 7.8 per cent in the same period last fiscal. The January month, however, marks the fifth consecutive month of growth for core sector output, which represents India’s main infrastructure industries and has a 40 percent weight in the index of industrial production.
As per the data, the key infrastructure sectors' output had expanded by 4.8 per cent in December 2024. “In January this year, the production of crude oil and natural gas declined compared to the year-ago period, while coal production rose by 4.6 per cent. Besides, steel output saw an increase by 3.7 per cent and electricity generation by 1.3 per cent in January 2025 against 10.6 per cent, 9.2 per cent, and 5.7 per cent, respectively in January 2024. However, the data further showed that refinery products, fertiliser, and cement output rose to 8.3 per cent, 3 per cent and 14.5 per cent in the month under review,” the data showed.
Meanwhile, the Centre’s fiscal deficit touched 74.5 per cent of the annual target at the end of January 2025. In actual terms, the fiscal deficit -- the gap between expenditure and revenue -- was Rs 11,69,542 crore during the April-January 2024-25 period. The deficit was 63.6 per cent of revised estimates (RE) of 2023-24 in the year-ago period, according to the data released by the Controller General of Accounts (CGA) on Friday.
The CGA data further showed that the central government's tax revenue (net) was Rs 19.03 lakh crore, or 74.4 per cent of the RE of 2024-25. It was at 80.9 per cent during the corresponding year of the last financial year. “The total expenditure was at Rs 35.7 lakh crore, or 75.7 percent of the RE. In the year-ago period it was at 74.7 percent of that year's RE,” it showed.
In the Union Budget presented in Parliament, the fiscal deficit for 2024-25 has been pegged at 4.8 per cent of GDP (lower than earlier estimate of 4.9 per cent) and at 4.4 per cent for 2025-26. In absolute terms, the fiscal deficit for the financial year ending March 2025 is estimated at Rs 15.69 lakh crore. “The total of Rs 10,74,179 crore has been transferred to state governments as devolution of share of taxes by Government of India up to January, which is Rs 2,53,929 crore higher than the previous year,” the data showed.
Out of the total revenue expenditure (Rs 28.12 lakh crore), Rs 8,75,461 crore was on account of interest payments and Rs 3,37,733 crore on account of major subsidies. Commenting on the CGA data, Aditi Nayar, chief economist, ICRA, said that revenue expenditure rose by 5.1 per cent year-on-year in January 2025, whereas capital expenditure surged by about 51 per cent, which would augur well for economic activity in the ongoing quarter.
“The Centre's capex needs to expand by about 15 per cent (y-o-y) in February-March 2025, on a high base, or record a monthly run rate of Rs 1.3 lakh crore, to meet the FY25 RE. A slight miss in capex relative to the target of Rs 10.2 lakh crore for FY2025 can't be entirely ruled out. Overall, ICRA expects the fiscal deficit to print in line with the FY2025 RE of Rs 15.7 lakh crore or 4.8 per cent of GDP,” Nayar said.
