India’s FY21 Fiscal Deficit Settles Marginally Below Revised Estimate
The North Block of the Central Secretariat building, which houses the Ministries of Finance and Home Affairs, stands in New Delhi. (Photographer: Prashanth Vishwanathan/Bloomberg)

India’s FY21 Fiscal Deficit Settles Marginally Below Revised Estimate

The central government’s fiscal deficit ended a little below the revised estimates presented in the Union Budget in February, showed data released by the Controller General of Accounts on Monday.

The government’s fiscal deficit settled at Rs 18.2 lakh crore or 98.5% of its revised estimate of Rs 18.49 lakh crore. The revenue deficit settled at Rs 14.54 lakh crore or 99.8% of its revised estimate.

In the Budget for 2021-22, the government had projected the fiscal deficit for FY21 at 9.5% in 2020-21, and said that it will target 6.8% in 2021-22.

Last financial year, the payment of past dues, particularly on account of food subsidies, added to the government fiscal deficit. In lieu of food subsidies due to be paid by the Government of India, the Food Corporation of India Ltd. had borrowed funds from the National Small Savings Fund.

In FY21, Rs 3.4 lakh crore was repaid to the NSSF on account of these dues, shows data available on the FCI website. This added to the fiscal deficit.

The fiscal deficit, as a percentage of the GDP estimate used in the budget is 9.3%, said Devendra Kumar Pant, chief economist at India Ratings & Research. This is lower than the 9.5% estimated in the budget.

“This was mainly due to 5.9% higher net tax revenue collection and 23.9% higher collections of non-debt capital receipts. Revenue expenditure was 2.5% higher than FY21 revised estimate, however, capital expenditure was 3.1% less than FY21 revised estimate. Capital expenditure in FY21 was 3.1% higher than the FY21 budget estimate,” Pant said.

  • The government’s revenue receipts for the fiscal ended March 31 stood at Rs 16.32 lakh crore, which was 104.9% of the full year’s revised target of Rs 15.55 lakh crore.
  • The government’s net tax collections came in at Rs 14.24 lakh crore or 105.9% of the target of Rs 13.45 lakh crore.
  • For the full year, expenditure stood at Rs 35.11 lakh crore, 101.8% of the revised target.
  • Capital expenditure stood at Rs 4.24 lakh crore, 96.9% of revised estimates.
  • Revenue expenditure stood at Rs 30.86 lakh crore, 102.5% of revised estimates.
  • Subsidy expenditure stood at Rs 6.89 lakh crore, 116% of revised estimates.

The government’s net tax collections for the previous fiscal came in at Rs 14.24 lakh crore. This is 4.9% higher than the actual collections of 2019-20 despite the economy contracting by about 7% in FY21 due to the Covid-19 pandemic.

One of the major contributors to this was the increased collection from excise duties, which saw a jump of 62.73% on year at Rs 3.90 lakh crore. In May 2020, the government had raised the excise duty on petrol by Rs 10 per litre and on diesel by Rs 13 per litre.

Higher-than-anticipated tax revenues helped to curtail the Government of India's fiscal deficit for FY2021 to Rs. 18.2 lakh crore, modestly below the revised estimate of Rs. 18.5 lakh crore, which will come as a relief to the bond markets, said Aditi Nayar, chief economist at ICRA. Simultaneously, revenue expenditure exceeded the revised estimate on account of the back-ended release of food subsidies, she said.

Based on the provisional data for FY21, the growth targets embedded in the Budget estimates for FY22, imply a moderate growth of 9.6% for revenue receipts and 8.5% for net tax revenues, as well as a 5.1% contraction in revenue expenditure and a robust 30.5% expansion in capital expenditure.
Aditi Nayar, Chief Economist, ICRA

Government Accounts For April 2021

Alongside FY21 data, revenue and expenditure pattern for April was also released.

  • Revenue receipts stood at Rs 1.47 lakh crore versus Rs 27,183 crore last year.
  • Net tax revenues stood at Rs 1.31 lakh crore compared to Rs 21,412 crore last year.
  • Gross tax revenue stood at Rs 1.7 lakh crore compared to Rs 67,557 crore in April last year.
  • Total expenditure stood at Rs 2.27 lakh crore.

“The fiscal outcomes for April 2021 vary considerably from April 2020, when the nationwide lockdown was in place. Firstly, the gross tax revenues in April 2021, a portion of which pertain to economic activity that took place in March 2021, were healthy, displaying an expansion of 152% over April 2020,” Nayar said. The capital expenditure recorded a healthy 66% year-on-year growth, given the low base related to the lockdown that had curtailed activity in April 2020. However, revenue expenditure contracted by a steep 35% over a year ago, she added.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.