Comments
Fiscal deficit is set to end lower than Revised Estimate, data for 11 months released on Wednesday indicated.
Fiscal deficit is the difference between income and expenditure of the Government.
According to data released by the Controller General of Accounts, the bookkeeper for the Central government, fiscal deficit reached a little over ₹14 lakh crore. This is 76 per cent of Revised Estimate of over ₹18.48 lakh crore as announced in the Budget on February 1. This is 9.5 per cent of GDP.
During the corresponding period of FY 2019-20, fiscal deficit was over ₹10.36 lakh crore, which was 135.2 per cent of Revised Estimate for that fiscal.
So, in value terms, deficit rose by over 36 per cent on year-on-year basis.
This happened, as Aditi Nayar, Principal Economist with ICRA, puts it, due to 0.5 per cent contraction in revenue receipts, amidst a growth of 12 per cent in revenue expenditure and the 33 per cent expansion in capital spending.
Sharp moderation
The sharp moderation in the pace of growth of the GoI’s gross tax revenues to a subdued 2 per cent in February 2021 from the high 20 per cent in January 2021 was on account of the YoY contraction in corporation tax collections as well as the ad hoc settlement of IGST of ₹48,000 crore with the States. As expected, another ad hoc IGST settlement of ₹28,000 crore has been announced by the GoI in March 2021, which will dampen the pace of YoY growth of its tax revenues for the ongoing month.
“Unless there are large refunds in March 2021, we expect the GoI’s tax revenues to exceed its FY2021 Revised Estimates (RE) by ₹60,000-80,000 crore,” said Nayar.
Some headroom
For March, the Centre has the headroom to release ₹6 lakh crore as revenue expenditure, relative to the outgo of ₹1.9 lakh crore last March.
It is estimated that revenue expenditure will fall short of the FY 21 RE by ₹70,000-90,000 crore, on account of non-interest and non-subsidy spending while capital expenditure is expected to be as projected in RE.
“With substantial headroom left in terms of the food subsidy amount that was yet to be disbursed at end-February 2021, we expect the fiscal deficit to climb sharply in the final month of FY2021. Regardless, we anticipate the GoI’s fiscal deficit to trail the FY2021 RE by ₹1.3-1.5 lakh crore, based on our expectation of a modest upside to the tax revenues, and undershooting of its non-interest non-subsidy revenue expenditure. Accordingly, we forecast the fiscal deficit in FY2021 at ₹17-17.2 lakh crore,” Nayar said.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.