₹75,000-crore surplus needed in March to meet deficit target

The fiscal deficit — the difference between the Government’s revenue and expenditure — has touched 114 per cent of the revised target (₹5.24 lakh crore) for the first 11 months of 2013-14. This is 5.3 per cent of the gross domestic product.

This means the Government will now need a surplus of around ₹75,000 crore in March to meet the revised fiscal deficit estimate.

According to data released by the Controller General of Accounts (CGA), fiscal deficit at February-end was around ₹6 lakh crore, much higher than the budget estimate of ₹5.42 lakh crore and the revised estimate of ₹5.24 lakh crore.

It may be noted that Finance Minister P Chidambaram, in the interim Budget, had revised the estimate to 4.6 per cent of GDP against the Budget estimate of 4.8 per cent. On Monday, Chidambaram claimed that 2013-14 would close with the fiscal deficit at 4.6 per cent of GDP, as planned.

The Government now has two options — increase revenue or reduce expenditure. CGA’s data clearly show that there are more options on the revenue front than on the expenditure side.

Revenue receipts during the 11 months of this fiscal stood at around 75 per cent of the revised estimate. The advance tax paid on March 15, and the tax drive last month are expected to boost revenue collections. Non-tax revenue, such as tax saving deposits, is also expected to help the Finance Ministry.

However, not much reduction is possible in expenditure. The Finance Ministry had instructed that expenditure should not exceed 15 per cent of the total in February. But CGA data show that total expenditure till February-end has already reached 88 per cent of the revised estimate. So, expenditure is within the prescribed ceiling.

According to CGA data, Plan expenditure touched 86 per cent of the revised estimate and non-Plan spending 88 per cent of the revised estimate. While the Plan expenditure has already been cut by around ₹80,000 crore in the revised estimate, under non-Plan expenditure, part of the fuel subsidy has been rolled over to the next year.

(This article was published on March 31, 2014)
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