With better-than-expected tax collection, fiscal deficit is expected to be lower than revised estimate for Fiscal Year 2023-24 (FY24), a senior government official said on Thursday. The Controller General of Accounts (CGA) will make fiscal deficit number of last fiscal public on May 31.
According to interim Budget for FY25, continuing on the path of fiscal consolidation witnessed in the post-pandemic years, fiscal deficit is expected to decline to 5.8 per cent of GDP in FY24 in line with the fiscal glide path envisioned by the government. The budget estimate was 5.9 per cent or ₹17.35-lakh crore.
“Fiscal deficit for FY24 is expected to be slightly better than pegged,” the official said on the condition of anonymity. Although he did not disclose how much lower it could be, but various research agencies and economist estimates at least 10-20 basis points (100 basis points mean 1 percentage point).
Healthy tax mop-up
This remark has been made at a time when both direct and indirect taxes have given more than estimated. According to the Ministry, net collection of direct taxes (gross collection minus refund) rose to ₹19.58-lakh crore in FY24 which is 17.7 per cent higher than ₹16.64-lakh crore of FY23. Originally, the target of direct tax collection was ₹18.23-lakh crore, which was later revised to ₹19.45- lakh crore. Now, based on provisional data, collections have exceeded budget estimate and revised estimate by 7.7 per cent and 0.7 per cent, respectively.
Similarly, total gross GST collection surged to ₹20.18-lakh crore in FY24, an 11.7 per cent increase compared to the previous year. GST revenue net of refunds as of March 2024 for the current fiscal year is ₹18.01-lakh crore, which is a growth of 13.4 per cent over same period last year. Central Board of Indirect Taxes and Customs (CBIC) has already announced that overall indirect tax collection, including Customs and Central Excise Duty, has exceeded RE by a handsome margin, though it is yet to make the figures public.
Lower capital expenditure and higher dividend receipts are also expected to help the government lower the deficit. Against the BE of over ₹10-lakh crore, RE has been pegged at ₹9.50-lakh crore. At the same time, receipt from dividend was over ₹63,000 crore against the target of ₹50,000 crore.
Expenditure in FY25
Meanwhile, the official mentioned that expenditure, as prescribed in the Budget, during the current fiscal is on track. “There is no impact on account of election,” he explained. The interim Budget has prescribed expenditure of ₹47.66-lakh crore comprising of ₹11.11-lakh crore of capital expenditure and rest as revenue expenditure.
The official also highlighted that the government is using its cash balance to pre-pone the buyback of dated security which were scheduled to mature in November. The RBI has already announced buyback of such securities worth ₹40,000 crore, out of which ₹10,500 crore acquired on Thursday.