Economy

Fiscal deficit for April-Jan at 66.8% of revised estimate

Our Bureau New Delhi | Updated on February 26, 2021

Centre’s fiscal deficit for April-December period of FY 2020-21 has exceeded two-third of the revised estimate (RE).

This has raised the hope that the Government might be able to end the fiscal even with some basis points (100 basis points mean 1 percentage point) lower than revised estimate. This will have some soothing effect on the bond market which is witnessing a surge in yield.

Fiscal deficit is difference between income and expenditure of the Government. Normally, borrowing is done to bridge the gap.

Initially, the Government set the target of around ₹8-lakh crore (3.5 per cent of GDP). However, the pandemic disturbed the government’s fiscal maths and made it revise the estimate to over ₹18.4-lakh crore (9.5 per cent of GDP).

According to monthly data made public by the Controller General of Accounts, the book keeper of the Government, fiscal deficit crossed over ₹12.34-lakh crore or 66.8 per cent of revised estimate. Total expenditure is now 73 per cent of revised estimate. Most important thing is capital expenditure is now over 82 per cent. This means there is more investment by the Government which is a good sign for the economy.

Now, expenditure is expected to see some better movement during February and March, as the Finance Ministry has clarified that Central Government Ministries and Departments can follow 2017 circular which prescribed 33 per cent of BE during January-March quarter and 15 per cent in March. However, it should be within RE.

On the receipt front, total collection is around 80 per cent of the RE. Here the important thing is that net tax revenue has touched over ₹11.01-lakh crore which is 82 per cent of RE. Now expectation is that, with improvement in GST collection, overall tax collection will be able to hit RE’s target of ₹11.34-lakh crore.

 

    
Published on February 26, 2021

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