NEW DELHI: The Centre’s fiscal deficit in the first half of this fiscal year touched 39.3% of the annual target, up from 37.3% a year before but it remained under control after a spike until July, showed official data released on Tuesday.
A tight leash on revenue expenditure over the past two months on top of an improved tax mop-up has prevented a spike in fiscal deficit.
It had hit 33.9% of the annual target up to July, sharply higher than 20.5% a year before, raising concerns about the government’s ability to stick to its fiscal deficit target of 5.9% of gross domestic product (GDP).
In absolute terms, the fiscal deficit between April and September stood at ₹7.02 lakh crore, against ₹6.20 lakh crore a year earlier, the data showed. The deficit in September alone dropped 24.6% on-year to ₹59,035 crore, the lowest this fiscal year after ₹37,233 crore in August.
However, due to elevated spending in initial months, the Centre’s total expenditure jumped 16.2% to ₹21.19 lakh crore in the first half of this fiscal, against the full-year target of 7.5%. This was driven by a 43.1% spike in capital spending, while revenue spending rose 10%. Total receipts, too, kept pace and rose 17.7% in the first half to ₹14.17 lakh crore, breaching the FY24 target of 10.6%.
As for September, revenue spending dropped 3.6% from a year before, against a rise of 6.7% in August — a sharp moderation from a doubling of such expenditure in July from a year before.
Capital expenditure rose 29% in September. In absolute term, it hit ₹1.17 lakh crore, a record for any month in the first half of a fiscal, as the government kept boosting such productive expenditure to spur economic growth.
Experts say the deficit is likely to remain somewhat contained in the coming months, as devolution transfers to states are unlikely to surge. According to ICRA chief economist Aditi Nayar, the Centre has to release ₹5.66 lakh crore to states in the second half, against ₹5.72 lakh crore a year before, thanks to a front-loading of such transfers earlier this fiscal.
Meanwhile, net tax revenues for the Centre rose 14.7% until September this fiscal to ₹11.60 lakh crore. Non-tax revenues surged 50.2% to almost ₹2.37 lakh crore, driven by handsome dividends by the Reserve Bank of India earlier this fiscal.
Gross tax revenue until September this fiscal grew 16%, beating the budgeted growth target. The cumulative corporate tax collection growth, which was negative until July, not just turned positive but is higher than the budgeted growth.
The corporation tax mop-up in September jumped 27% amid strong advance tax inflows; mop-up in the first half is almost 49% of the FY24 target.
Source: The Economic Times