Fiscal deficit for April-May period at 12% of Budget Estimate

The fiscal deficit for the first two months of the current fiscal year is more than 12 percent of the budget estimate. It is 4 percentage points higher than the deficit during the corresponding period of the last fiscal year. Experts estimate that the fiscal deficit for the full year is higher than the budget estimate of 6.4 percent for FY23.

The fiscal deficit is the difference between total spending and government revenue. It is an indicator of the total loans needed by the government.

According to the data, the total government receipts at the end of May were ₹3.81 crore, or 16.7 per cent of the BE of FY23. The collection was about 18 per cent of the BE of FY22 in the same last financial period. In May, (net) tax revenue was 15.9 percent of BE in FY23. It was 15.1 percent of BE FY22 in the year-ago period. In actual terms, the net tax revenue was ₹3,07,589 crore during April and May.

Total cost

Total expenditure at the end of May was ₹5.85 crore or 14.8 per cent of BE for the year. It was 13.7 percent of the BE in the corresponding period. Among revenue expenditures, fertilizer subsidies, especially urea, registered high growth. It crossed Rs. 10,000 crore in two months as against Rs. 4,829 crore in the corresponding period of last financial year. Industry sources said the government is now paying ₹91.96 per kg of urea as against ₹18.78 per kg last April. An increase in nutrient-based support has also been noted.

Aditi Nayar, Chief Economist, ICRA, said: “We continue to insist that the devolution of central tax authority will exceed FY23 budget estimates, led by the expected upside in non-selective tax revenue, which calls for an early reassessment of monthly amounts shared with states to enable increase its spending and support economic growth.

Nayar expects that much of the higher budget subsidies and the loss related to the selective fee reduction will be absorbed by higher-than-estimated non-selective taxes, limiting the extent of the Iraqi government’s fiscal deficit excess in FY23 to $1. -lakh crores is higher than the budget estimate, even if there is no savings in spending. Furthermore, “a higher nominal GDP versus business is likely to contain the projected fiscal deficit at 6.5 percent of GDP, just slightly above the budgeted 6.4 percent of GDP.”

On a note, Indian Ratings and Research Corporation (Ind-Ra) believes that continued high inflation, which leads to higher nominal GDP, is expected to help the government achieve its tax collection target in FY23. The center has front-loaded capital expenditure in FY23, resulting in capital expenditure growth of 70.1 per cent year-on-year in the first two months of FY23. While the tax cut for petrol and diesel will have an impact on tax collection, the memorandum prepared by Sunil Kumar Sinha and Paras Jasrai said unionization, the float in other revenue is likely to offset the decline in tax collection.

“There is no significant threat to the government’s fiscal deficit target despite the fiscal deficit rising by 65.6 percent year-on-year during the first two months of FY23,” she said.