Fiscal Deficit For April-February Below Revised Estimates
The portrait of Mahatma Gandhi is displayed on an Indian rupee note. (Photographer: Brent Lewin/Bloomberg)  

Fiscal Deficit For April-February Below Revised Estimates

The central government’s fiscal deficit in the first eleven months of FY21 ran below the revised estimate of 9.5% of the GDP presented at the time of the Union Budget, shows data released by the Controller General Of Accounts.

While the fiscal deficit for April-February suggests the government may manage to end the year with a lower deficit than projected, subsidy arrears paid out in the final month may bring the budget gap closer to the revised estimates.

  • April-February fiscal deficit was 76% of revised estimates. In actual terms, the deficit stood at Rs 14.05 lakh crore compared with the revised estimate of Rs 18.48 lakh crore.

  • April- February revenue deficit was at 71.6% or revised estimates or Rs 10.43 lakh crore. The budget has pegged it at a revised Rs 14.56 lakh crore.

“We anticipate the Government of India’s fiscal deficit to trail the FY21 revised estimate by around Rs 1.3-1.5 lakh crore, based on our expectation of a modest upside to the tax revenues, and undershooting of its non-interest non-subsidy revenue expenditure. Accordingly, we forecast the fiscal deficit in FY21 at Rs 17.0-17.2 lakh crore,” said Aditi Nayar, principal economist at ICRA Ltd.

Tax Revenue Growth Slows

The fine print of the February accounts suggests that tax revenue growth slowed.

  • For the month of February, gross tax revenue grew 2.2% year-on-year. This was lower than the 19.65% rise seen in January.

  • Cumulatively, between April-February, gross tax revenues are now just 0.7% below the collections seen in the same period in the previous fiscal.

  • In comparison to budget estimates, tax receipts are at 90% of the revised estimates while total revenue receipts are at 88% of revised estimates.

The sharp moderation in the pace of growth of gross tax revenues to a subdued 2% in February 2021 from the high 20% in January 2021, was on account of the year-on-year contraction in corporation tax collections as well as the ad-hoc settlement of IGST (integrated GST) of Rs 48,000 crore with the states.
Aditi Nayar, Principal Economist, ICRA

Nayar added that another tranche of IGST settlement of Rs 28,000 crore has been announced in March 2021, which will dampen the pace of growth in tax revenues for March as well.


  • In February, the government’s total expenditure was 53% higher than last year, the data shows. April-February expenditure is 14.3% above a year earlier.

  • Compared to revised estimates, capital expenditure is at 92.4% while revenue expenditure is at 80%.

A part of the government’s expenditure this year is going towards settling past dues and subsidy arrears.

As of February, the total subsidy payout stood at Rs 3.6 lakh crore compared to the revised estimate of Rs 5.95 lakh crore, suggesting that some of the adjustment will continue in March and bring the eventual fiscal deficit closer to 9.5% of the GDP.

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