India’s Apr-Feb fiscal deficit at ₹15 trillion, 86.5% of FY24 target

  • The Centre aims to reduce the fiscal deficit to 5.8% of gross domestic product during FY24, from 6.4% in the previous fiscal year.

Rhik Kundu
Updated28 Mar 2024, 05:48 PM IST
The budgeted annual estimates for fiscal deficit, revised in the vote-on-account budget on 1 February, was at  <span class='webrupee'>₹</span>17.35 trillion for FY24. Image: Pixabay
The budgeted annual estimates for fiscal deficit, revised in the vote-on-account budget on 1 February, was at ₹17.35 trillion for FY24. Image: Pixabay

New Delhi: India’s fiscal deficit during the first 11 months of FY24 stood at 15.01 trillion, or 86.5% of the revised annual estimate, according to data released by the Controller General of Accounts on Thursday.

The fiscal deficit for the corresponding period of the previous year was at 14.54 trillion, or 82.8% of the annual estimate of 17.55 trillion for FY23.

The budgeted annual estimates for fiscal deficit, revised in the vote-on-account budget on 1 February, was at 17.35 trillion for FY24. 

The decline in the fiscal deficit, despite a jump in government spending to fuel economic growth, was due to higher tax receipts and an increase in non-tax revenue.

The Centre aims to reduce the fiscal deficit—the difference between the government’s income and expenditure—to 5.8% of gross domestic product during FY24, from 6.4% in the previous fiscal year.

The fiscal deficit target for FY24 was revised from 5.9% of gross domestic product during the vote-on-account budget.

The government is committed to lowering the fiscal deficit to 5.1% of GDP by FY25.

A higher fiscal deficit leads to a higher debt burden and more spending on debt servicing, which can be unhealthy for an economy and risks devaluing the currency and impacting private investments.

The government's capital expenditure rose to 8.06 trillion during April-February, or 84.8% of the revised annual estimate, from 5.90 trillion in the same period in FY23.

Revenue expenditure rose to 29.42 trillion, or 83.1% of the revised annual estimate, from 29.03 trillion in the corresponding period in FY23.

Total expenditure increased to 37.47 trillion, or 83.4% of the revised annual estimate, from 34.94 trillion in the corresponding period in FY23.

Meanwhile, total receipts during the April-February FY24 period stood at 22.46 trillion, or 81.5% of the revised annual estimate, of which tax receipts stood at 18.49 trillion, or 79.6% of the revised annual estimate.

Non-tax revenue stood at 3.60 trillion, or 95.9% of the revised annual estimate.

The surge in the centre's fiscal deficit in February 2024 can be partly attributed to the higher tax devolution released during the month ( 2.1 trillion in Feb 2024 vs 1.4 trillion in Feb 2023), which led to a decline in the revenue receipts and net tax revenues in that month, rating agency ICRA said in a statement.

"The GoI's gross tax revenues need to record an 8% growth in the last month of FY2024 to meet the RE (revised estimates) for the year, which seems achievable," it said.

"The GoI has released 10.3 trillion as tax devolution to the states in FY2024 by end-Feb 2024, leaving 0.7 billion for disbursal to the states to meet the target tax devolution of 11 trillion indicated in the FY2024 RE by the GoI, half as much as the release in March 2023," it added.

Meanwhile, higher-than-expected tax and non-tax revenues, including dividends from the Reserve Bank of India (RBI) and state-run banks, will offset any revenue shortfall from disinvestment and help the centre maintain its fiscal deficit target for FY24.

Interestingly, finance minister Nirmala Sitharaman had in the recently tabled interim budget lowered FY24's divestment target to 300 billion, from 510 billion budgeted previously.

As of 1 February, the government has raised only about 125 billion, and it is unlikely that the revised divestment target for FY24 will be met.

However, the Union government expects to receive 1.04 trillion as dividends from the Reserve Bank of India (RBI) and state-run lenders in 2023-24, according to the revised estimates presented in the interim budget on 1 February.

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First Published:28 Mar 2024, 05:48 PM IST
HomeEconomyIndia’s Apr-Feb fiscal deficit at ₹15 trillion, 86.5% of FY24 target

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