The Centre’s fiscal deficit has exceeded 114 per cent of the Budget estimate over the first eight months of the current fiscal. But the Finance Ministry is confident of limiting the deficit to the Budget estimate, which is about ₹6.24 lakh crore. or 3.3 per cent of the GDP.

According to an official, the expenditure begins from April 1, while revenue picks up only during the second half of the fiscal. Once the revenue picks up it helps close the gap between earning and expenditure, in the remaining four months of the fiscal.

The government spent over ₹16.31 lakh crore in April-November, more than 66 per cent of the Budget estimate. At the same time, it earned only about ₹9 lakh crore during the period, nearly 49 per cent of the Budget estimate. The earning comprises over ₹7.31 lakh crore in tax revenue, over ₹1.38 lakh crore in non-tax revenue and ₹26,277 crore in non-debt capital receipts (recovery of loans of over ₹10,467 crore plus disinvestment proceeds of ₹15,810 crore).

Meanwhile, experts said fears of a fiscal slippage will persist. There are several risks to meeting the Budgeted targets for revenues and expenditures, with one of the predominant concerns arising from a possible shortfall in indirect tax collections, despite the seasonal pick-up in tax revenues in the last quarter of every fiscal.

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“We expect that the government may attempt to limit the extent of fiscal slippage in the current year; its fiscal deficit may be placed at 3.3-3.4 per cent of GDP in the revised estimate for FY19. Moreover, the announcement of open market operation purchases by the RBI in January 2019, and a decline in crude oil prices, would keep a check on G-sec yields in the immediate term,” said Aditi Nayar, Principal Economist with ICRA.

Tax revenue growth continued to display mixed trends, with a healthy expansion in direct taxes juxtaposed by a contraction in indirect tax collections on a year-to-date basis. In April-November 2018, C-GST (Central Goods and Services Tax) collections stood at a relatively moderate 49 per cent of the target of ₹6 lakh crore, which suggests an impending shortfall relative to the level budgeted.

Notwithstanding concerns related to the inflows from the long-term capital gains tax and the lower-than-budgeted personal income tax collections, Nayar does not expect a meaningful shortfall in the direct tax collections, driven by higher-than-budgeted corporate tax collections.

Disinvestment proceeds touched ₹34,000 crore by the last week of December, which is likely to be boosted by potential buybacks by some PSUs. Purchase of the government’s stake in certain entities by other PSUs may help to shore up the disinvestment proceeds. However, these is still some doubt on achieving the target of ₹80,000 crore .

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