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Thursday, Jun 05, 2003

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Tax refunds push up fiscal deficit in April

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MASSIVE refunds, leading to net negative tax revenue collections, has caused an increase in the Centre's fiscal deficit to Rs 17,140 crore during April 2003, compared to 15,239 crore for the corresponding opening month of the previous fiscal.

According to provisional figures released by the Controller General of Accounts here on Wednesday, the Centre's net tax revenues for April 2003 amounted to minus Rs 1,074 crore as against Rs 2,087 crore during the same month last year.

While non-tax revenues were higher (Rs 1,650 crore versus Rs 1,178 crore), these could not offset the negative tax collections, resulting in total net revenue receipts of only Rs 576 crore (Rs 3,265 crore).

After taking into account non-debt capital receipts of Rs 2,198 crore (Rs 2,092 crore), the Centre's total receipts (excluding debt creating capital) stood lower at Rs 2,774 crore (Rs 5,357 crore).

The Centre was, however, able to counter the impact of lower revenues through a reduction in total expenditure, from Rs 20,686 crore in April 2002 to Rs 19,914 crore in April 2003.

This, in turn, was made possible mainly by lower interest payments (Rs 5,287 crore versus Rs 8,020 crore), which is clearly a product of declining interest rates on Governmental borrowings.

The fiscal deficit was, therefore, restricted to Rs 17,140 crore, which was still higher than the Rs 15,329 crore posted in April 2002.

But on the other hand, the primary deficit (which is the fiscal deficit net of interest payments) has risen massively from Rs 7,309 crore in April 2002 to Rs 11,853 crore in April 2003, which is certainly cause for worry.

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