Centre Reaches 25 Per Cent Of Its Annual Fiscal Deficit Target In April-June

The current fiscal deficit stands at Rs 4.51 lakh crore, while the annual fiscal deficit target is of Rs 17.87 lakh crore

The Indian government has already touched 25.3 per cent of its fiscal deficit target for the whole year. According to the data released by the Controller General of Accounts (CGA) on Monday, the fiscal deficit for the first quarter of the current fiscal year (FY24) accounts for about 25 per cent of the total fiscal deficit target for the year (2023-24). 

According to a PTI report, the current fiscal deficit stands at Rs 4.51 lakh crore, while the annual fiscal deficit target is of Rs 17.87 lakh crore. For the first quarter of FY23 (2022-23), the fiscal deficit stood at 21.2 per cent of the Budget Estimates (BE). 

The government had estimated, in the union budget, to bring down the deficit to 5.9 per cent of the gross domestic product (GDP) in the current fiscal year (2023-24).

While the government’s fiscal deficit stood at Rs 2.10 lakh crore in April-May this year, the deficit for April-June increased to Rs 4.51 lakh crore, the data reveals. Fiscal deficit is a measure of the difference between the total expenditure and revenue of the government. It helps understand the total debt required by the government to meet its needs. 

The sharp increase in the deficit comes after the Reserve Bank of India (RBI) gave out a surprisingly big dividend which added to the non-tax revenue in May majorly. It helped control the deficit for April-May at about 12 per cent of the full-year target, as per a report by Moneycontrol. 

But June saw a fall in the total receipts for the Centre, with net tax revenue of Rs 1.56 lakh crore, down by 21.5 per cent, on a year-on-year (YoY) basis. This hit in the tax revenue was attributed to the transfer of a double installment of tax devolution to states, worth Rs 1.18 lakh crore. While the gross tax collections increased by 11.3 per cent in June on a YoY basis, corporate tax collections fell down by 0.4 per cent, from June 2022. 

Collectively, the Centre’s net tax revenue fell by 14.3 per cent, but total receipts saw a marginal 0.5 per cent increase in the first quarter of FY24, compared with the same period a year ago.

The government has followed an approach focused on capital expenditure for economic development. The capex in June increased by 62.8 per cent to Rs 1.11 lakh crore, taking the total for the first quarter to Rs 2.78 lakh crore in 2023, about 28 per cent of the Rs 10 lakh crore target for FY24. 

But it seems the government is on track to achieve its fiscal deficit target for FY24, as fiscal concerns “appear limited”, noted Aditi Nayar, ICRA’s chief economist, as reported by Moneycontrol.

The government has set a target for itself to reduce its fiscal deficit to 5.9 per cent of GDP in 2023-24, so that it can meet the milestone of 4.5 per cent by 2025-26.