Railways, fertiliser, and road ministries led the government expenditure during the first six months of the current fiscal, data released by the Controller General of Accounts (CGA) on Tuesday showed. However, ministries, including Petroleum & Natural Gas and Co-operation, need to accelerate spending in the next six months to meet the budget target. Data showed that the fiscal deficit, the difference between expenditure and income, for FY 24 reached over 39 per cent of the budget estimate during the April–September period, higher than 37 per cent for the corresponding period of the last fiscal.

Six months of income and expenditure data is important, as conventionally, these are used to finalise a revised estimate for the current fiscal year. Based on the trend, it is expected that there could be a reduction in allocation for central ministries and departments where expenditures have been low. The entire exercise is called re-prioritisation in government parlance.

Data showed that April-September net tax revenues were ₹11-lakh crore, or 49.8 per cent of the annual estimate, higher than ₹10.12-lakh crore in the same period last year. Corporate tax collections rose 20 per cent year-on-year to ₹4.51-lakh crore. Total expenditure during the period was ₹21.19-lakh crore, or 47.1 per cent of the annual goal, higher than ₹18.24-lakh crore in the same period last year.

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Surplus cushion

Commenting on the latest data, Aditi Nayar, Chief Economist with ICRA, said the higher than budgeted dividend surplus transfer of ₹87,420 crore from the RBI is likely to provide some cushion to meet any undershooting in other revenue streams, including disinvestment or potential overshooting in expenses relative to the respective BE, such as MGNREGA and LPG subsidy.

Revenue expenditure declined by 4 per cent to ₹3.3-lakh crore in September, whereas capex expanded by 29 per cent to ₹1.2-lakh crore, the highest in any month in H1 FY2024. “With this, 49 per cent of the FY2024 BE capex target had been achieved, which is favourable in light of the potential slowdown closer to the parliamentary elections,” she said.

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Rajni Sinha, Chief Economist with CARE, said that the ratio of capital expenditure to revenue expenditure increased to 0.30 in H1 FY24, higher than 0.23 a year ago. On the expenditure front, subsidy spending remains elevated, led by a higher outlay on fertiliser and petroleum subsidies. “While we remain hopeful of the government meeting its fiscal deficit target of 5.9 per cent of GDP, we need to be watchful of the trajectory of revenue spending ahead of the election season, along with the possibility of lower-than-expected nominal GDP growth,” she said.