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Finance Ministry on Friday reported fiscal deficit for the first half of FY22 at 35 per cent of Budget Estimate against 69.7 per cent and 50.2 per cent in the previous corresponding periods of FY20 and FY21.
This is a three-year low in value terms. Experts expect the fiscal deficit to be lower than BE by 20-80 basis points. According to data released by the Controller General of Accounts (CGA), the fiscal deficit was over ₹5.26-lakh crore mainly on account of better tax and non-tax collection and moderate expenditure in the six-month period.
Revenue expenditure in H1 grew by 6.33 per cent compared to FY21 and 7.35 per cent compared to FY20. Devendra Kumar Pant, Chief Economist with India Ratings & Research, said that a better metric to gauge the quality of spending is the non-interest revenue expenditure(NIRE).
“It is perplexing that the NIRE has barely grown compared to FY20 (0.2) and expanded by 2.5 per cent in comparison with FY21. Encouragingly, the capital expenditure seems to have gained some pace as it was 1.22 times and 1.38 times of H1FY20 and H1 of FY21, respectively,” he said. Aditi Nayar, Chief Economist with ICRA, said, “we forecast the GoI’s gross tax revenues to exceed the FY22 BE by at least ₹2-lakh crore. Of this, roughly ₹1.4-lakh crore would be retained by the Centre and 60,000 crore would be shared with the States.”
Good show by core sector
Meanwhile, the output of the eight core sectors — coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity — grew 4.4 per cent in September 2021. This is against an output growth of 0.6 per cent recorded in September 2020. The eight core industries grew 11.5 per cent in August this year.
For the April-September period, the output growth of these eight sectors in aggregate stood at 16.2 per cent against a contraction of 14.5 per cent in the same period last year. The eight core industries account for 40.27 per cent of the weight of items in the Index of Industrial Production (IIP).
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