People walk past North Block of the Central Secretariat building, which houses the Ministries of Finance and Home Affairs, stands in New Delhi, India (Photographer: Prashanth Vishwanathan/Bloomberg)  

Fiscal Deficit Reaches 55.3% Of FY19 Target In May

India’s fiscal deficit exceeded the halfway mark of its budgetary estimate two months into the new financial year.

Fiscal deficit, the gap between the government's revenue and expenditure, rose to Rs 3.45 lakh crore at the end of May, according to data released by the Controller General of Accounts. That’s 55.3 percent of the targetted Rs 6.24 lakh crore in 2018-19.

The gap is lower than what it was in May last year, at 68.3 percent of the FY18 target, as the government had frontloaded expenditure to kickstart the investment cycle. India's finances were constrained then as it had to revise its deficit target upwards due to the implementation of the Goods and Services tax. It aims to keep the deficit within 3.3 percent of the country's gross domestic product for FY19.

The government's total expenditure for April-May rose to Rs 4.72 lakh crore, or 19.4 percent of the full-year target. Total revenue receipts stood at 7 percent of the target at Rs 4.09 lakh crore.

Tax revenue was at Rs 1.02 lakh crore, or 6.9 percent of the full-year target. Non-tax revenue hit 9.8 percent of the target at Rs 24,049 crore. Capital expenditure reached 21.3 percent of the FY19 target, compared to 17 percent in the same period last year.

The Government’s Fiscal Plan

Budget documents showed that the government is expecting a 16.7 percent rise in its gross tax revenue in FY19. Here’s what its budgetary estimates are:

  • The gross tax revenue is expected to increase to Rs 22.7 lakh crore.
  • As a percent of GDP, gross tax revenue is expected to be 12.1 percent.
  • The net tax revenue for the Centre is pegged at Rs 14.8 lakh crore.
  • Total expenditure for FY19 is pegged at Rs 24.4 lakh crore. That’s inclusive of the expenditure as a result of GST compensation to states.
  • Capital expenditure is estimated to increase to Rs 3 lakh crore in FY19.