India’s Fiscal Deficit Hits 12.3% Of Full-Year Target Till May-End; Govt Expenditure At Rs 5.85 Lakh Crore

India’s fiscal deficit during April-May hit Rs 2,03,921 crore, or 12.3 per cent of the target for the entire current financial year, mainly due to higher expenditure, according to official data. The total receipts at the end of May stood at Rs 3.81 lakh crore or 16.7 per cent of the FY23 BE, while the total expenditure was at Rs 5.85 lakh crore or 14.8 per cent of this year’s BE.

The fiscal deficit, which is the difference between the government’s total expenditure and revenue, had stood at 8.2 per cent of the FY22 budget estimate (RE) during the corresponding period a year ago. For the full financial year 2022-23, the fiscal deficit of the government is estimated at Rs 16,61,196 crore.

In May, the net tax revenue stood at 15.9 per cent of the FY23 target, against 15.1 per cent of the BE 2021-22 in the year-ago period. In actual terms, the net tax revenue stood at Rs 3,07,589 crore during April-May 2022-23, according to the latest data from the Controller General of Accounts (CGA).

Finance Minister Nirmala Sitharaman, while presenting the annual budget in February, fixed the fiscal deficit target at 6.4 per cent of the GDP for the current financial year 2022-23, compared with 6.7 per cent in the previous fiscal year.

The total receipts of the government at the end of May was at Rs 3.81 lakh crore or 16.7 per cent of the BE for 2022-23. The collection was about 18 per cent of the BE of 2021-22 in the corresponding period last fiscal, according to the data.

As per the data, the central government’s total expenditure at the end of May stood at Rs 5.85 lakh crore or 14.8 per cent of this year’s budget estimate (BE). It was 13.7 per cent of the BE in the corresponding period.

Sunil Kumar Sinha, principal economist at India Ratings and Research, said, “April-May 2022 net-tax revenue grew 31.7 per cent over last year. However, 69.4 per cent lower surplus transferred by the RBI to union government resulted in non-tax revenue of April-May 2022 declining by 57.7 per cent y-o-y. Revenue receipts although grew just 2 per cent during April-May 2022, India Ratings and Research (Ind-Ra) believes continued high inflation leading to higher nominal GDP is expected help the Union government achieve its tax collection target of FY23.”

He added that the central government has front-loaded capital expenditure (capex) in the financial year 2022-23 leading to 70.1 per cent y-o-y capex growth in the first two months of FY23. Ind-Ra believes that while a cut in excise duties for petrol and diesel will have an impact on union excise collections, buoyancy in other revenues is likely to compensate for the decline in excise collections. “No major threat to the government’s fiscal deficit target even though fiscal deficit is 65.6 per cent higher than last year during the first two months of FY23.”