Robust tax mop-up limits fiscal deficit to 50% of FY24 goal

New Delhi: The central government’s fiscal deficit stood comfortably at ₹9 trillion in the April to November period, about half of the estimated full-year target, as tax revenue grew in twin digits, and spending and subsidy outgo were broadly in line with estimates.

With this, fiscal deficit, the gap between government spending and revenue that is met through borrowing, for the full fiscal looks set to remain in line with the ₹17.9 trillion estimated at the beginning of the year. The government has so far stuck to its borrowing calendar although it has secured Parliament’s approval for extra spending of a net ₹58,378 crore in the current fiscal involving cash outgo. The Centre has borrowed ₹8.1 trillion in the first eight months of this fiscal against the ₹12.3-trillion market borrowing target.

Centre’s gross tax revenue in April-November of this fiscal expanded about 15% from the year-ago period to ₹20.4 trillion, showed data released on Friday by the Controller General of Accounts (CGA). This is an improvement over the 10.5% expansion in tax revenue projected in the Union budget.

The Centre’s corporate tax receipts grew 20% in 8MFY24 to ₹5.14 trillion, while personal income tax collections jumped 29% in the same period to ₹5.67 trillion. Its GST collections rose by over 13% in the April to November to ₹5.3 trillion. Customs duty collections in the period stayed at ₹1.4 trillion.

However, excise duty receipts contracted 7.8% in the first eight months of this fiscal to ₹1.76 trillion as the government had to reduce the rate of windfall tax on crude oil and on export of petrol, diesel and jet fuel this fiscal.

Centre’s receipts from dividend and profits in the first eight months exceeded the full-year target on account of a dividend from the Reserve Bank of India.

Devendra Kumar Pant, chief economist and senior director – public finance at India Ratings and Research said the pressure points on FY24 fiscal deficit originate from disinvestment and revenue expenditure. Pant said slower nominal GDP growth may push fiscal deficit to 6% of GDP this fiscal against the budget estimate of 5.9%. The Centre had projected a 10.5% expansion of GDP this fiscal in nominal terms.

Centre’s revenue receipts in the first eight months of this fiscal stood at ₹17.2 trillion or two-thirds of the full-year target. Total spending stood at 59% of the full-year target, at ₹26.5 trillion. However, capital expenditure in the April to November period this fiscal stood at ₹5.8 trillion, or 58.5% of the targeted ₹10 trillion for the full year.

In the first eight months of the fiscal, Centre spent ₹2.4 trillion in subsidies, which accounts for two thirds of the ₹3.7 trillion target for the year. In the same time a year ago, centre had spent ₹3 trillion in food, petroleum and fertilizer subsidies.