India’s April-June 2023 Fiscal Deficit Touches 25.3% of Full-FY24 Target – News18

The Centre’s fiscal deficit at the end of the first quarter touched 25.3 per cent of the full-year target, government data showed on Monday. In absolute terms, the fiscal deficit stood at Rs 4,51,370 crore at the end of June 2023, according to the data released by the Controller General of Accounts (CGA).

Fiscal deficit, which is the difference between the total expenditure and revenue of the government, is an indication of the total borrowings that are needed by the government.

The deficit stood at 21.2 per cent of the Budget Estimates (BE) in the corresponding period of the financial year 2022-23.

In the Union Budget, the government projected to bring down the fiscal deficit to 5.9 per cent of the gross domestic product (GDP) in the current 2023-24 financial year. The deficit was 6.4 per cent of the GDP in 2022-23 against the earlier estimate of 6.71 per cent.

Unveiling the revenue-expenditure data of the Union government for the first three months of 2023-24, CGA said the net tax revenue was Rs 4,33,620 crore or 18.6 per cent of the BE for the current fiscal. The net tax revenue collection was 26.1 per cent at end-June 2022.

The central government’s total expenditure in the first quarter stood at Rs 10.5 lakh crore or 23.3 per cent of BE. The expenditure had touched 24 per cent of the BE in the year-ago period.

Of the total expenditure, Rs 7.72 lakh crore was on the revenue account and Rs 2.78 lakh crore was towards the capital account.

Of the total revenue expenditure, Rs 2,43,705 crore was on interest payments and Rs 87,035 crore on major subsidies.

Aditi Nayar, chief economist and head (research & outreach) at ICRA, said, “In Q1 FY2024, the Government of India’s fiscal deficit jumped to Rs 4.5 trillion or 25.3 per cent of the FY2024 BE, from Rs 3.5 lakh crore in the first three months of FY2023, with a surge in capex and accelerated tax devolution to the state governments, offsetting the sharp jump in non-tax revenues.”

She added that with fiscal concerns appearing limited and the MPC unlikely to raise policy rates in the upcoming policy review, despite the anticipated food item-led surge in the July 2023 CPI inflation, ICRA expects the 10-year G-sec to range between 7.0-7.2 per cent in the near term.

While net tax revenues reported a contraction of 14 per cent, non-tax revenues surged by 149 per cent boosted by the RBI dividend, amidst a flattish revenue expenditure, and a 59 per cent YoY expansion in capex.

Gross tax collections recorded a mild 3 per cent rise in Q1 FY2024, with a continuing contraction in corporate tax collections, offsetting the growth in private income tax and GST collections.

With a double instalment released in June 2023, central tax devolution rose to Rs 2.4 lakh crore in Q1 FY2024 from Rs 1.4 lakh crore in Q1 FY2023, contributing to the YoY contraction in net tax revenues.

“In July 2023, the GoI released an additional Rs 729 billion as tax devolution, bringing the aggregate amount for this fiscal so far to Rs 3.1 trillion, a huge 54 per cent higher than April-July FY2023, and about 30 per cent of the FY2024 BE. To meet the latter, the GoI has to release Rs 7.1 trillion to the states in the next eight months, which is 5 per cent lower than the amount devolved in August-March in FY2023. This would contain the incremental fiscal deficit in some of the ensuing months,” Nayar said.

(With Inputs From PTI)