New Delhi: India’s fiscal deficit for the June quarter stood at Rs40,196 crore ($8.64 billion), or 10.5% of the full-year’s target, mainly due to receipts of about Rs1 trillion from sale of wireless spectrum, government data showed on Friday.
In February 2010, the government had forecast a fiscal deficit of Rs3.81 trillion, or 5.5% of gross domestic product for the 2010-11 financial year.
The spectacular gains of around 1 trillion rupees from third-generation (3G) wireless spectrum auction, against an estimated Rs35,000 crore, and a jump in corporate tax collection boosted the government receipts in the first quarter of the current fiscal.
“The fiscal deficit in the current financial year is expected to fall below 5.5% on account of higher receipts from auction of 3G spectrum and better tax collections,” said N R Bhanumurthy, an economist at the National Institute of Public Finance and Policy, a Delhi-based think tank.
“However, the government might go for the same level of market borrowings (Rs4.57 trillion) as announced in the budget while spending more on social welfare programmes especially providing food security to people above poverty line as well,” he said.
The government has liberally released funds for educational and health ministries, and spent about Rs95,300 crore in June compared with Rs73,800 crore a year ago, government data showed.
The fiscal deficit during the first quarter in 2009-10 stood at 31% of the full-year’s revised gross domestic product estimates.
“The reduction in fiscal deficit in 2010-11 has been projected on the basis of improvement in tax revenues primarily due to increase in the central value added tax, increase in non-debt capital receipts and reforms in expenditure management,” finance minister Pranab Mukhejee said in a written statement submitted in Parliament on Friday.
Tax receipts were Rs83,994 crore and total expenditure was Rs2.42 trillion for the first three months of the current fiscal year.
Analysts say despite hike in key policy rates by the central bank, Indian economy could still grow at around 8.5% in 2010-11 compared to 7.4% in the previous fiscal.