In 6 months, India's fiscal deficit crosses 95% of annual target; Here's why

India’s fiscal deficit in the first half of the financial year has widened to 95.3 per cent of the Budget Estimate (BE), mainly on account of slow growth in revenue collections.

The fiscal deficit was at 91.3 per cent of BE at September-end of the last financial year. (Image: PTI)

New Delhi: India’s fiscal deficit in the first half of the financial year has widened to 95.3 per cent of the Budget Estimate (BE), mainly on account of slow growth in revenue collections, as per an official data released on Thursday. The deficit during the April-September period was Rs 5.95 crore against the annual target of 6.24 lakh crore for the current financial year. The fiscal deficit was at 91.3 per cent of BE at September-end of the last financial year. The government has set the fiscal deficit target for this year at 3.3 per cent of the GDP, down 20 basis points compared to previous year’s 3.5 per cent. According to the data released by the Controller General of Accounts (CGA), the net tax collection during September-end was Rs 5.82 lakh crore, or 39.4 per cent, of BE. It was 44.2 per cent of the BE in similar period during last fiscal. The total receipts of the government during April-September 2018 were Rs 7.09 lakh crore, or 39 per cent, of BE, compared to 40.6 per cent in the same period of 2017-18. The CGA data showed that total expenditure during April-September 2018 was Rs 13.04 lakh crore or 53.4 per cent of BE. It further said that the capital expenditure was Rs 1.62 lakh crore or 54.2 per cent of BE. Earlier this month, rating agency Moody’s had predicted that excise cut on petrol and diesel prices is credit negative for the country as it will bring down government’s revenue and increase the fiscal deficit by 0.1 per cent to 3.4 per cent of the GDP in year ending March 2019. The rating agency also stated that the earning of public sector oil marketing companies (OMCs) would be ‘negatively affected’ as they also absorbed Rs 1 per litre cut in their pricing. Warning about the roadblocks, the US-based firm also mentioned that these measures create downside risks to the central government's fiscal deficit target of 3.3 per cent of GDP for fiscal 2018. A fiscal deficit occurs when a government's total expenditures exceed the revenue that it generates, excluding money from borrowings. Deficit differs from debt, which is an accumulation of yearly deficits.