Indian Government’s Fiscal Deficit Reaches 45% Of Full-Year Target In October

The Indian govt received Rs 15.9 lakh crore till Oct 2023, including Rs 13.01 lakh crore in tax revenue (net), Rs 2.65 lakh crore in non-tax revenue, and Rs 22,990 crore in non-debt capital receipts.

Indian government’s fiscal deficit stood at 45 per cent of the full-year budget estimate as of October end, data released by the Controller General of Accounts (CGA) on Thursday revealed. The fiscal deficit of the government during the April to October period in the current financial year was Rs 8.03 lakh crore, the data showed. 

Relatively, the deficit during the first seven months of the previous fiscal year stood at 45.6 per cent of the budget estimates of 2022-23, reported PTI. The overall fiscal deficit estimate for FY24 stands at Rs 17.86 lakh crore, which comes out as 5.9 per cent of the GDP. The fiscal deficit represents the difference between expenditure and revenue for the government. 

The Government of India received Rs 15.9 lakh crore so far up to October 2023, including Rs 13.01 lakh crore in tax revenue (net), Rs 2.65 lakh crore of non-tax revenue, and Rs 22,990 crore in non-debt capital receipts. This amount made up 58.6 per cent of the corresponding budget estimates of the current fiscal year of total receipts. Notably, the non-debt capital receipts include recovery of loans (Rs 14,990 crore), and miscellaneous capital receipts (Rs 8,000 crore). 

The total expenditure of the central government stood at Rs 23.94 lakh crore during the April to October period in the current fiscal, which accounted for 53 per cent of the corresponding budget estimates for FY24, the data revealed. Out of the overall expenditure, Rs 18,47,488 crore was on the revenue account and Rs 5,46,924 crore was on the capital account. 

“In October, capex declined by 15 per cent on a year-on-year basis, which helped to contain the fiscal deficit at the end of the seven-month period. After considering the additional economic cost towards the extension of free foodgrains under the NFSA for January-March 2024, the higher subsidy on LPG, the nutrient based subsidy rates on P&K fertilisers for the ongoing rabi season, and the additional amount likely to be required for MGNREGS, we estimate spending to exceed the FY2024 BE by Rs 0.8-1 lakh crore,” said Aditi Nayar, chief economist, ICRA Ltd. 

Vivek Jalan, partner, Tax Connect Advisory, noted that lowering fiscal deficit now would help the government to present a better interim budget. “ It seems that the benefits of the good fiscal deficit numbers will certainly be passed on to the middle class as the government looks to consolidate its position before the elections in 2024,” Jalan stated. 

The data further revealed that the Government of India transferred Rs 5,28,405 crore to state governments as devolution of share of taxes till October 2023, which stood higher by Rs 93,966 crore than the previous year. 

From the overall revenue expenditure, the data revealed that Rs 5,45,086 crore was towards interest payments, while Rs 2,31,694 crore was spent towards major subsidies. Notably, the government plans to lower the fiscal deficit below 4.5 per cent of the GDP by 2025-26.