The Centre’s fiscal deficit in the first eight months of the current financial year stood at 50.7% of the Budget Estimate (BE) for FY24, compared with 58.9% of the respective annual target in the year-ago period. The containment of the deficit was enabled by an expenditure squeeze in recent months, particularly in October (-14) and November (-13.8%), even as tax receipts remained buoyant.
Revenue expenditure contracted 16.1% on year in November, the second sharpest pace so far in FY24; capital spending increased marginally at 1.6% during the month.
ICRA’s chief economist Aditi Nayar said: “With the model code of conduct (for polls) likely to be imposed in the ensuing quarter, the capex target may be missed.”
Total receipts jumped 95.9% in November, due to lower tax devolution to states in the month, and cumulative growth in receipts in April-November was 19.2%.
In November, the Centre devolved Rs 729,61 crore to states – 37.5% lower than last year.
In absolute terms, the total expenditure during April-November stood at Rs 26.52 trillion, and total receipts at Rs 17.46 trillion.
As a consequence, the Centre’s fiscal deficit in April-November, in absolute terms, stood at Rs 9.07 trillion, 7.3% lower than the corresponding period of FY23. For the full year FY24, the Centre has pegged the fiscal deficit at Rs 17.87 trillion, or 5.9% of the GDP.
Although the Centre has maintained that it will meet its Budgeted fiscal deficit target, some experts say the extra expenditure under the supplementary demand of grants as well as lower-than-Budgeted nominal GDP growth, may lead to a marginal slippage.
“The government is likely to achieve its FY24 fiscal deficit target in level terms, however, slower nominal GDP growth may push the fiscal deficit in ratio terms to 6.0% of GDP,” said DK Pant, chief economist, India Ratings and Research (Ind-Ra).
In a recent note, Ind-Ra had said that a second batch of supplementary demand for grants will be brought in which shall push the revenue expenditure to Rs 37.1 trillion in the current fiscal year, which will be Rs 2 trillion higher than the budgeted figure, resulting in fiscal slippage.
The first supplementary demand for grant mentioned an additional outlay of Rs 58,378 crore in FY24.
On the receipts front – net tax revenues rose 17.2% year-on-year at Rs 14.36 trillion in April-November period driven by a 149% jump in receipts in November. Non tax-revenues, meanwhile, soared 43.4% on year to Rs 2.84 trillion in the first eight months of this fiscal.
In April-November, the Centre’s gross tax revenue, net of refunds, stood at Rs 20.42 trillion, which was 14.7% higher on year. Within which corporate tax collections came in at Rs 5.14 trillion and income tax collections at Rs 5.67 trillion, both, respectively higher 20.1% and 29.4%, year-on-year.
The collections from Central goods and services tax (CGST) were up 13.4% on year at Rs 5.35 trillion.