The Centreâs fiscal deficit widened in April-February 2024 to â¹15.01 lakh crore, which is about 86.5 per cent of Revised Estimate of â¹17.35-lakh crore, official data released on Thursday showed.
The fiscal deficit in the same period a year ago stood at â¹14.53-lakh crore, which was 82.8 per cent of revised estimate.Â
Till end January this fiscal, fiscal deficit was at about â¹11-lakh crore.Â
Finance Minister Nirmala Sitharaman had surprised in the recent Interim Union Budget by stepping up pace of fiscal consolidation and pegged the fiscal deficit aim at 5.8 per cent of GDP for current fiscal and 5.1 per cent for next financial year.Â
Higher tax devolution
The surge in Centreâs fiscal deficit in February 2024 (â¹4-lakh crore vs â¹2.6-lakh crore in February 2023) can be partly attributed to the higher tax devolution released during the month under review (â¹2.1-lakh crore vs â¹1.4-lakh crore in February 2023). This led to a decline in the revenue receipts and net tax revenues in February 2024, said Aditi Nayar, Chief Economist, Head-Research & Outreach, ICRA Ltd.
Meanwhile, total expenditure during April-February FY24 was â¹37.47-lakh crore, or about 83 per cent of the annual target, against â¹34.94-lakh crore seen a year earlier.
Capex
On the capital expenditure front, government outlay stood at â¹8.05-lakh crore between April-February, 84.8 per cent of its target for FY24. This was higher than the â¹5.90-lakh crore incurred in the same period a year ago. The governmentâs capex-led growth strategy has been a crucial factor behind the economyâs robust GDP growth in post-Covid years and helped the country maintain status of fastest growing large economy in the world.Â
Madan Sabnavis, Chief Economist, Bank of Baroda, said the government accounts show that the Centre is still around â¹7.43-lakh crore short of the expenditure target which means that this amount would be spent in March 2024.Â
Major shortfalls are in agriculture (â¹20,668 cr); rural (â¹48,088 crore); chemicals and fertilizers (â¹16,150 crore); roads (â¹26,000 crore) and consumer affairs (â¹35,117 crore).
There could be some savings here at about â¹50,000-60,000 crore if these budgets are not exhausted, he added.
As of February, any savings combined with a higher than projected GDP growth rate can help reduce the fiscal deficit ratio by 0.1-0.2 per cent of GDP, according to Sabnavis.Â
Indian economy is widely expected to grow close to 8 per cent this fiscal, higher than the governmentâs projected growth level of 7.6 percent.Â
While strong tax collections at the Centre are expected to help rein in fiscal deficit within the targeted level, there is risk of fiscal slippage at the level of States, warned some analysts.Â
Tax revenues
The Centreâs net tax revenues for April-February stood at â¹18.5-lakh crore, which is 79.6 per cent of the overall target. In April-February 2023, the net tax revenues stood at â¹17.32-lakh crore.
Meanwhile, non-tax revenue for April-February 2024 stood at â¹3.6-lakh crore, or 95.9 per cent of the overall target, official data showed.
Total receipts for the 12-month period stood at â¹22.5-lakh crore, which was 81.5 per cent of the overall target.
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