GST collections above the Rs 1.7 lakh crore mark for a tenth consecutive month

Goods and Services Tax collections came in at Rs 1.77 lakh crore in December, holding above the Rs 1.7 lakh crore mark for a tenth consecutive month, latest data showed, according to media reports.

FICCI proposes government to consider increasing capex in FY26 by 15 percent

Federation of Indian Chambers Of Commerce & Industry has stated that the thrust laid by the government on capex over the last few years aided recovery and ensured support to the growth momentum. Given the uncertainty amidst persisting global headwinds, government’s thrust on public capex on physical, social and digital infrastructure will be important to maintain the growth momentum. The capital outlay in Union Budget 2024-25 was budgeted at Rs 11.11 lakh crore. The quality of the fisc has improved over time with revenue expenditure being contained and productive capital expenditure being prioritized. It has proposed government to consider increasing capex in FY26 by 15 percent over 2024-25. FICCI noted that Indian economy has exhibited resilience, despite persisting downside risks. Economic Survey 2023-24 released in July 2024 projected India to grow at 6.5-7.0 per cent in fiscal 2024-25 – which though moderation from 8.2 percent growth reported in 2023-24 is encouraging given the global economic environment. Union Budget 2024-25 maintained a strong commitment towards balancing various objectives for achieving the vision of Viksit Bharat. Continuing and deepening reforms agenda on nine priorities outlined in the Union Budget 2024-25 will be important for sustaining resilience seen in the economy.

Interest rate on Floating Rate Savings Bond shall be 8.05% for next six months says RBI

Reserve Bank of India or RBI announced Rate of Interest on Floating Rate Savings Bond, 2020 (Taxable) – FRSB 2020(T) for the Period January 01, 2025 – June 30, 2025. The bank noted that the coupon/interest rate of the bond would be reset half yearly, starting with January 01, 2021 and the coupon/interest rate will be set at a spread of (+) 35 bps over the prevailing National Savings Certificate (NSC) rate. Accordingly, the coupon rate on FRSB 2020 (T) for the period January 01, 2025 to June 30, 2025 and payable on July 1, 2025 remains at 8.05% (7.70%+0.35%), unchanged from the previous half-year.

States' total outstanding liabilities decline in recent year but still remain above pre-pandemic level

Reserve Bank of India (RBI) released the Report "State Finances: A Study of Budgets of 2024-25". The theme of this year’s Report is "Fiscal Reforms by States", offering a comprehensive assessment of the finances of State governments for 2024-25 against the backdrop of actual and revised/provisional accounts for 2022-23 and 2023-24, respectively. State governments contained their consolidated gross fiscal deficit (GFD) within 3 per cent of gross domestic product (GDP) and their revenue deficit at 0.2 per cent of GDP during 2022-23 and 2023-24. In 2024-25, States have budgeted a GFD of 3.2 per cent of GDP.

The improvement in the quality of expenditure was sustained, with capital expenditure rising from 2.4 per cent of GDP in 2021-22 to 2.8 per cent in 2023-24 and budgeted at 3.1 per cent of GDP in 2024-25. States' total outstanding liabilities declined from 31.0 per cent of GDP at end-March 2021 to 28.5 per cent at end-March 2024 but remain above the pre-pandemic level (25.3 per cent at end-March 2019). State-specific Fiscal Responsibility Legislations (FRLs) along with tax and expenditure reforms have strengthened their finances over the past two decades, the RBI noted.

Outlook:

The government’s capital expenditure, or spending on building physical infrastructure, was Rs 5.13 lakh crore, or 46.2% of the annual target so far in current fiscal, as against Rs 5.86 lakh crore for the same period a year earlier. This moderation has been mostly due to national elections held in April-May followed by some key state elections in ensuing period and the upcoming budget is likely to offer yet another boost to the capex trends over next year. Meanwhile, the Centre’s revenue collections comprising both tax and non-tax sources have been buoyant in H1:2024-25, a latest update in RBI’s monthly bulletin stated. The robust growth in tax receipts was primarily driven by income tax and goods and services tax (GST) while non-tax revenues benefitted from the jump in surplus transfer by the Reserve Bank. On the expenditure front, while revenue expenditure is on track to meet the budgeted targets, there is a slack in the capital expenditure. The growth in States’ revenue receipts during H1:2024-25 was driven by tax revenues, while there was a contraction in non-tax revenues and grants from the Centre. On the expenditure front, States sustained the pace of revenue expenditure during H1:2024-25, while their capital expenditure declined.