India's April-October Fiscal Deficit At 36% Of Budget Estimate
Tax revenue remained strong, while government expenditure picked up.
The central government's finances continue to benefit from improved tax revenues even as expenditure, too, has picked up.
The fiscal deficit for the April-September period stood at Rs 5.47 lakh crore or 36.3% of the budget estimate, according to data from the Controller General of Accounts. In the year-ago period, the government's fiscal deficit had surpassed budget estimates.
The central government had budgeted for a fiscal deficit of 6.8% of GDP for FY22. According to a news report from Bloomberg, lagging asset sales could push up the fiscal deficit to over 7% of GDP.
"While the massive 82% expansion in revenue receipts amid the measured 10% rise in total expenditure has compressed the fiscal deficit to a modest Rs. 5.5 lakh crore in April-October 2021, languishing disinvestment proceeds pose a meaningful concern," said Aditi Nayar, chief economist at ICRA.
This (fiscal deficit) is the lowest in last four years in level terms and lowest in last 13 years as percentage of full year’s fiscal deficit.Sunil Kumar Sinha, Principal Economist, India Ratings & Research
Net tax revenue continued to pick up. Revenue receipts for the April-October period stood at Rs 12.6 lakh crore or 70.5% of the budget estimate. This is much higher than the 34.2% of the budget estimate collected during this period a year earlier.
Net tax revenue in the first seven months of the fiscal stood at Rs 10.5 lakh crore or 68.1% of the budget estimate, compared to 35.2% last financial year.
"Corporate tax and custom collection have led revenue receipt growth," said Sinha. "Union excise duty growth has slowed to 27.03% in April-October 2021 from 33.34% in April-September 2021," he added.
We expect direct taxes to exceed the FY22 budget estimate by Rs. 85,000 crore, led by corporation tax. Moreover, we forecast excise duty and customs duty to exceed the FY22 budget estimate.Aditi Nayar, Chief Economist, ICRA
Expenditure picked up in October, after the government removed curbs on ministries because of an improvement in revenue.
Total expenditure stood at Rs 18.3 lakh crore or 52.4% of the budget estimate. In the year-ago period, the government had spent 54.6% of its budgeted expenditure.
Revenue expenditure in April-October was at Rs 15.7 lakh crore or 53.7% of the budget estimates, compared to 55.7% in the same period an year earlier.
Capital expenditure stood at Rs 2.53 lakh crore or 45.7% compared to 47.9% until October in the last financial year.
"In the month of October 2021, while revenue expenditure growth recorded a double digit expansion, capital spending displayed a discouraging contraction," Nayar said.