2023-08-31 12:20:54
The deficit, in absolute terms, almost hit Rs 6.06 lakh crore between April and July, against Rs 3.41 lakh crore a year earlier, as the government seems to have frontloaded not just capital but also revenue expenditure. The front-loading of tax devolution to states, too, played its part in pushing up the Centre’s deficit so far.
Capital spending jumped nearly 52% during the April-July period from a year earlier to Rs 3.17 lakh crore, higher than the budgeted annual rise of about 36%, as the government kept pushing such productive expenditure to spur economic growth.
Revenue expenditure rose 15.9% year on year until July to Rs 10.64 lakh crore, way above the targeted annual increase of 1.5%. Overall expenditure increased 22.5% to Rs 13.71 lakh crore, higher than the budgeted hike of 7.5%.
Meanwhile, net tax revenues for the Centre dropped about 13% until July this fiscal from a year before to Rs 5.83 lakh crore. However, a doubling of the non-tax revenues to Rs 1.79 lakh crore, driven by handsome dividends by the Reserve Bank of India, softened the blow of the tax shortfall.
Total receipts dropped to Rs 7.75 lakh crore between April and July, against Rs 7.86 lakh crore a year before and compared with the targeted annual increase of 10.6%.
Senior finance ministry officials have already asserted that the FY24 fiscal deficit target of 5.9% of gross domestic product (or Rs 17.87 lakh crore) will be strictly adhered to even though the spending under a few schemes could vary from the budgetary outlays.
As ET has reported, the government may have to raise its budgetary spending for the rural employment guarantee scheme by about Rs 30,000 crore in the current fiscal from the budgeted Rs 60,000 crore.
Moreover, the government this week announced a Rs 200 cut in the price of cooking gas cylinders for households. It is likely to cost the exchequer more than Rs 7,500 crore in 2023-24 if the government doesn’t pass on the burden to oil companies.
Analysts also expect a likely extension of the Central government’s free ration scheme beyond December 2023 and higher support to farmers under the PM Kisan programme ahead of the 2024 general election.
“If the government still chooses to prioritise fiscal prudence and maintain its FY24 fiscal deficit target of 5.9% of GDP, then these measures will have to be funded through savings from other schemes or by slowing down on capex. The latter could risk a moderation in public capex in the latter part of FY24,” according to a Nomura report last week.
Of course, the nominal GDP for FY24 is expected to rise at a faster pace than the budgeted 10.5%, which will create some additional spending leeway for the government without jeopardising the fiscal deficit target.
Fiscal position in July
As for July alone, the Centre’s capital expenditure jumped almost 15% to Rs 38,599 crore, while overall spending inched up 84.6% to Rs 3.30 lakh crore. Capital spending, which had crossed the crucial Rs 1 lakh crore mark in June, dropped sharply sequentially in July. Revenue expenditure, however, doubled to Rs 2.91 lakh crore in July, pushing up the overall spending.
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