New Delhi: In what can limit the government’s ability to significantly raise capital spending to boost the economy, data released by the Controller General of Accounts (CGA) shows that it has overshot its revenue deficit target and exhausted 96.1% of its full-year fiscal deficit target in the first five months (April-August).

During the same period a year earlier, the government had used up 76.4% of the total fiscal deficit target for 2016-17. As for the revenue deficit, last year the government reached 91.7% of its target in the first five months, whereas it is at 134% this year.

During the April-August period, total expenditure was 44.3% of the full-year target of Rs21.5 trillion, against 40.5% during the same period in the previous fiscal year.

While revenue expenditure is at a higher level this year—45.8% of the full-year target till August, as against 41% during the same period last year—capital expenditure so far has fallen short at 35.5% during the April-August period compared to 37% during the same period last year.

The Union finance ministry had advanced the budget presentation by a month to 1 February this year, instead of the usual practice of presenting it on the last working day of February, in order to initiate revenue mobilization and capital expenditure measures right from the beginning of the new fiscal year.

Aditi Nayar, principal economist at Icra Ltd, said that after the surge in expenditure in the early months of fiscal 2018, the pace of spending was arrested in August. “The decline in the surplus transferred by the Reserve Bank of India, the considerable targets for other communication services and disinvestment, and the low allocation for public sector bank recapitalisation would curtail the size of any fiscal stimulus that the government may announce in FY2018," she added.

The finance ministry on Thursday said it would raise Rs2.08 trillion through market borrowings in the second half of 2017-18, sticking to its budget target, but did not rule out the possibility of selling more government bonds for additional spending.

However, economic affairs secretary Subhash Chandra Garg said that he does not foresee breaching the fiscal deficit target of 3.2% of gross domestic product for 2017-18 as of now.

Facing a possible revenue shortfall due to lower non-tax revenue and uncertain goods and services tax (GST) collections, the finance ministry has prodded central public sector enterprises (CPSEs) to declare “liberal dividends" to the government and set aside an additional Rs25,000 crore for capital expenditure this fiscal year to revive investment demand in the economy.

Finance minister Arun Jaitley on Thursday reviewed the capital expenditure programmes and the status of dividend distribution by CPSEs in the petroleum, defence, power, road transport, railways, coal, mines, steel and atomic energy sectors.

Garg told reporters that the Rs25,000 crore capital expenditure will be over and above the Rs3.85 trillion budgeted for 2017-18.

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