The central government’s finances continue to benefit from improved tax revenues.
The fiscal deficit for the April-November period stood at Rs 6.96 lakh crore or 46.2% of the budget estimate, according to data from the Controller General of Accounts published on Friday. In the year-ago period, the government’s fiscal deficit had surpassed budget estimates.
Aditi Nayar, chief economist at ICRA, said incremental revenues continued to sharply outpace expenditure. Although the fiscal deficit up to November stood at only 46% of the budget estimate, fading hopes of the disinvestment target being met portend a deficit of Rs 16.5-17 lakh crore in FY22, overshooting the budgeted target, Nayar said.
Not everyone agrees with that view. India Ratings & Research sees the government close the year with a fiscal deficit of 6.6% of GDP, 20 basis points lower than the budgeted 6.8%.
Net tax revenue and non-tax revenue continued to benefit from the economic recovery and festive push to the economy.
Revenue receipts for the April-November period stood at Rs 13.6 lakh crore or 75.9% of the budget estimate. This is much higher than the 40.2% of the budget estimate collected during this period a year earlier.
“While gross tax revenues displayed a robust growth of 18% in the month of November 2021, the higher release of central tax devolution to the states curtailed the net tax revenues, and thereby enlarged the fiscal deficit for that month,” said Nayar.
Expenditure continued to pick up but lagged behind the pick in revenue collections.
Total expenditure stood at Rs 20.7 lakh crore or 59.6% of the budget estimate. In the year-ago period, the government had spent 62.7% of its budgeted expenditure.
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Revenue expenditure in April-November was at Rs 18 lakh crore or 61.5% of the budget estimates, compared to 63.3% in the same period an year earlier.
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Capital expenditure stood at Rs 2.7 lakh crore or 49.4% compared to 58.5% until October in the last financial year.
”The year-on-year halving in capital spending in the month of November 2021 is disappointing, even though it can partly be attributed to interruptions related to the festive season,” Nayar said. “After crossing a healthy Rs 57,000 crore in September 2021, capital outlay has fallen sharply in the subsequent two months.”