New Delhi: The Union government’s fiscal deficit for the first quarter (April-June) of 2009-10 was Rs1.24 trillion, 31% of the full year’s Budget estimate of Rs4 trillion. Fiscal deficit measures the extent to which government expenditure exceeds receipts and has to be met through borrowing.
Income gap: Finance minister Pranab Mukherjee. Pankaj Nangia / Bloomberg
According to data released on Friday by the controller general of accounts (CGA), the fiscal deficit in the corresponding period of the last fiscal was Rs 86,126 crore, around 26% of the eventual fiscal deficit of Rs3.26 trillion registered during the period.
In the first quarter of 2009-10, two trends, one in revenues and the other in expenditure, had an impact on the size of the fiscal deficit.
On the revenue side, the gross tax collections for the first quarter of 2009-10 were Rs1 trillion, around 13% lower than the same in the corresponding period of the previous year. Tax revenue shrunk in the current fiscal on account of a fall in indirect tax collections. A cut in excise and service tax rates towards the end of last fiscal and removal of customs duty on import of crude negatively hurt indirect tax collections in 2009-10.
The fallout of the dip in tax revenue in the first quarter of 2009-10 was partially neutralized by a relatively slow pace of spending by the rural development and health ministries. Both the ministries account for a large chunk of the Union government’s plan expenditure. In rural development, the Plan expenditure in the first quarter of 2009-10 was Rs16,785 crore, around 23% of the year’s targeted spending. During the corresponding period of the previous year, rural development ministry had spent 57% of its annual allocation.
Similarly, in the case of the health ministry, the plan expenditure in the June quarter was Rs2,465 crore, 13% of the estimated annual spending. In the corresponding period of the previous fiscal, the ministry had spent 22% of its budgeted annual outlay.