Despite 32 pc rise in gross tax revenues

Our Bureau

Expenditure rise


Growth in

revenues was overtaken by a sharper increase in total expenditure (40 per cent), with a higher growth of 59 per cent in Plan expenditure and 34 per cent in non-Plan spending.

New Delhi, Aug. 25

The Centre's deficit numbers have registered a spurt during the first quarter of the current fiscal.

According to the Finance Ministry's Quarterly Review of Government finances tabled in Parliament on Friday, the Centre's gross fiscal deficit during April-June 2006, at Rs 77,740 crore, was 42.6 per cent higher than the Rs 54,517 crore for April-June 2005.

The corresponding figures were similarly higher for the revenue deficit (Rs 70,675 crore versus Rs 47,311 crore) and the primary deficit (Rs 48,126 crore versus Rs 28,089 crore). The fiscal deficit equals the Centre's total expenditure (on both revenue and capital accounts) minus its revenue and other non-debt receipts. The primary deficit is the fiscal deficit net of interest payments, while revenue deficit is the difference between the Centre's revenue receipts and revenue expenditures.

Buoyant conditions

The rise in deficit numbers comes despite a healthy 32 per cent increase in the Centre's gross tax revenues, led by service tax (up 58 per cent), corporation tax (up 50 per cent), income tax (up 40 per cent), customs (32 per cent) and excise (seven per cent). Significantly, the collection of securities transaction tax during the first quarter, at Rs 1,217 crore, was way above the Rs 359 crore raised in the same period of 2005, reflecting buoyant market conditions.

But the growth in revenues was overtaken by a sharper increase in total expenditure (40 per cent), with a higher growth of 59 per cent in Plan expenditure and 34 per cent in non-Plan spending. The review statement said that the higher Plan expenditure was due to the large advance transfers made for the Rural Employment Guarantee Scheme (REGS), while non-Plan spending zoomed because of higher food and fertiliser subsidies.

Spending under the REGS alone went up from Rs 4,369 crore to Rs 8,996 crore. There has also been a `front-loading' of expenditure by various Ministries and Departments during the first quarter of this fiscal, the statement added.

(This article was published in the Business Line print edition dated August 26, 2006)
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