India aims to reduce its fiscal deficit to 5.1% in 2025 while increasing infrastructure spending.

• The finance minister of India, Nirmala Sitharaman, announced that the country's fiscal deficit for the financial year 2025 will be 5.1%, down from the previously revised 5.8% for 2024.
• In fiscal year 2025, the capital expenditure will increase by 11.1% to 11.11 trillion rupees ($133.9 billion).

On Thursday, Nirmala Sitharaman, India's finance minister, announced that the country's fiscal deficit for the financial year 2025 would be 5.1%, narrowing from the previously revised 5.8% for 2024.

The interim budget for fiscal year 2025 predicts a 11.1% increase in capital expenditure to 11.11 trillion rupees ($133.9 billion), while tax revenue is expected to rise by 11.4% to 38.31 trillion rupees ($461.7 billion), Sitharaman stated.

Nilesh Shah, managing director at Kotak Mahindra Asset Management, stated that India has accomplished a trinity of impossible by increasing infrastructure investment, promoting inclusive growth, and preserving fiscal prudence.

India's air connectivity is being developed extensively, as Indian carriers have recently ordered over 1,000 aircraft, with the emphasis being on expediting the development of new airports.

In June of the previous year, Indigo made the largest commercial aircraft order in history by purchasing 500 Airbus A320s, which will be delivered between 2030 and 2035, surpassing Air India's deal to buy 470 planes from Airbus and Boeing the same month.

Akasa Air last month ordered 150 Boeing 737 MAX planes.

The India-Middle East-European Union corridor, unveiled at G20 last year, was highlighted as a "gamechanger" by her, as U.S. President Joe Biden had called it "a real big deal."

From a growth perspective, the increased investment in infrastructure could serve as a catalyst for increased private capital expenditure, according to Shah's statement to CNBC.

Sitharaman announced that long-term interest-free loans would be provided to states for the development of tourist centers, emphasizing the growth of spiritual tourism in the previous year.

The new Ram Mandir in Ayodhya, India, could attract an additional 50 million to 100 million tourists annually, according to Jefferies.

Sitharaman announced that 750 billion rupees will be provided as a 50-year interest-free loan to states to promote tourism.

Sitharaman emphasized four key areas of government focus for India's economy: poverty alleviation, youth development, women empowerment, and farmer support.

She stated that our top priorities are meeting the needs, fulfilling the aspirations, and promoting the welfare of theirs.

Earlier this week, the Finance Ministry stated that India could achieve a gross domestic product of $5 trillion by 2027, making it the world's third-largest economy.

"Despite challenges such as food, fertilizer, fuel, and finances arising from the pandemic, India has managed to overcome them and is on track towards becoming a developed nation by 2047, as stated by Sitharaman," she said.

During an election year, the interim budget serves as a temporary financial plan to address immediate needs until a new government is formed, and the full union budget will be released afterwards.