India’s Fiscal Deficit Reaches 135.1% Of Budgeted Target During April-November
India’s fiscal deficit touched 135.1% of the budgeted target during April-November despite the government’s attempt to cut spending.
The gap between revenue and expenditure stood at Rs 10.75 lakh crore during April-November, according to data on the website of the Controller General of Accounts. Last year, the fiscal deficit had stood at 114.8% of the budgeted target in the same duration.
The nation’s revenue receipts rose to Rs 8.13 lakh crore, standing at 40.2% of the target set for the ongoing fiscal in the April-November period against 50.1% achieved a year ago.
Total receipts rose to Rs 8.31 lakh crore, which came up to 37% of its budgeted estimates compared to 48.6% last year.
Total expenditure stood at Rs 19.06 lakh crore. That’s 62.7% of the full-year target compared with 65.3% spent last year.
Of this, capital expenditure was at Rs 2.41 lakh crore, at 58.5% of the budgeted target compared to 63.3% in the corresponding period of the previous year.
Revenue expenditure was at Rs 16.65 lakh crore, at 63.3% of the budget compared to 65.6% of the budget in the same time last fiscal.
The continuing 17% decline in revenue receipts, coupled with subdued disinvestment receipts, has engendered the massive fiscal deficit in FY20 so far, said Aditi Nayar, principal economist at ICRA. While capex growth has improved to 13%, revenue expenditure growth has been curtailed to 4% in April-November 2020, she said. But a rise in government expenditure, after a contraction in the previous quarter, provided some respite.
November saw a sharp and encouraging ramping up of the Government of India’s spending, with the monthly outgo recording a year-on-year expansion of 32% for revenue expenditure and nearly 250% on a small base for capital expenditure. A sustenance of this trend will bolster economic activity, and help the Indian economy exit the recession in the coming quarter.Aditi Nayar, Principal Economist, ICRA
The government’s gross tax revenue was at Rs 10.26 lakh crore, contracting 12.6% in April-November 2020. Of this, Rs 2.68 lakh crore was collected as income tax, down 12.28% from the corresponding period of the previous year. Corporation tax collected stood at Rs 2.89 lakh crore, contracting 35.66% annually.
The goods and services tax collected by the central government was Rs 3.28 lakh crore during the period, a contraction of 25.33%.
On a monthly basis, the government’s tax revenue recorded an expansion of 23% in November, an improvement over the trend in the previous month, and a relief compared to the situation that prevailed in the first half of FY21, said Nayar. The sharp uptick in the monthly tax revenue in November was driven by personal income tax, excise duty and customs duty, whereas corporate tax collections continued to record a contraction, she said. The government fiscal deficit for FY21 is estimated at Rs 14.5 lakh crore, equivalent to 7.5% of nominal GDP, according to Nayar’s estimates.