Centre’s fiscal deficit has widened during the first nine months (April-December) of the current financial year 2022-23 (FY23) to ₹9.9-lakh crore accounting to 60 per cent of the budget estimate (BE). However, fiscal deficit as a percentage of GDP for full year is likely to be within budget estimate of 6.4 per cent for the current year.

Final position of the deficit will be known on Wednesday when Finance Minister Nirmala Sitharaman presents the Union Budget for FY 2023-24. Fiscal deficit refers to the gap between expenditure and income and a large part of this gap is bridged through market borrowing. FY23 budget has estimated deficit at ₹16.61 lakh crore.

Widening deficit

Data released by Controller General of Accounts (CGA) on Tuesday showed that deficit during first nine months of FY23 was 31 per cent higher than ₹7.59-lakh crore of corresponding period of last fiscal. Also, deficit was little over 50 per cent of BE during last fiscal.

Data showed that net tax revenues reported a modest growth of 5.56 per cent. However, non-tax revenue recorded a decline of little over 17 per cent. At the same time, on the expenditure side, capital expenditure saw a rise of over 25 per cent rise and revenue expenditure rose by 9 per cent.

Aditi Nayar, Chief Economist with ICRA said, “With a typical surge in receipts in the last quarter, and a cushion provided by an assessed year-on-year decline in tax devolution, we expect overshoot in the government’s fiscal deficit to be limited to ₹0.8-lakh crore relative to the FY2023 BE, with the target of 6.4 per cent of GDP likely to be met.”

While monthly capex inched up to ₹42,831 crore in December 2022, from ₹38,099 crore in November 2022, it paled in comparison to the outlay of ₹1.2-lakh crore in December 2021, that had been boosted by the equity infusion into Air India. The balance capital spending needed to meet the FY2023 BE is 29 per ceny higher than the actual capex incurred in Q4 FY2022. A pickup in the States’ offtake of the interest-free capex loan scheme in Q4 FY2023 will be crucial to ensure that the budgeted target is met.

”We estimate the total spending in the current fiscal to exceed the budget estimate by ₹2.3 lakh crore, lower than the net cash outgo announced in the first supplementary demand for grants (₹3.3 lakh crore), after taking into account our expectations of expenditure savings by ministries/departments. This implies a modest y-o-y rise of 7 per cent in total spending in Q4 FY2023,” Nayar said.

comment COMMENT NOW