Apr-Oct fiscal deficit at ₹8.03 tn, 45% of annual estimates | Mint
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Business News/ Economy / Apr-Oct fiscal deficit at 8.03 tn, 45% of annual estimates
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Apr-Oct fiscal deficit at ₹8.03 tn, 45% of annual estimates

The widening of the fiscal deficit during FY24 was due to a jump in government spending to fuel economic growth, but this was to an extent offset by higher tax receipts and an increase in non-tax revenue.

The fiscal deficit for April-October of the previous fiscal stood at ₹7.58 trillion, or 45.6% of the annual estimates of ₹16.61 trillion.Premium
The fiscal deficit for April-October of the previous fiscal stood at 7.58 trillion, or 45.6% of the annual estimates of 16.61 trillion.

NEW DELHI: The government’s fiscal deficit during the first seven months of the current financial year stood at 8.03 trillion, or 45% of the annual estimates of 17.87 trillion, according to the data released by the Controller General of Accounts on Thursday.

In comparison, the fiscal deficit for April-October of the previous fiscal stood at 7.58 trillion, or 45.6% of the annual estimates of 16.61 trillion.

The widening of the fiscal deficit during FY24 was due to a jump in government spending to fuel economic growth, but this was to an extent offset by 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 5.9% of gross domestic product during FY2024, from 6.4% in the previous fiscal.

Department of economic affairs secretary Ajay Seth had on Wednesday said the government is confident of achieving the 5.9% target and committed to lowering the fiscal to 4.5% of GDP by FY26.

Capital expenditure rose to 5.47 trillion during April-October FY24, or 54.7% of the annual estimates, from 4.09 trillion in the same period in FY23.

Total receipts during the period stood at 15.91 trillion, or 58.6% of annual estimates, of which tax receipts stood at 13.02 trillion, or 55.9% of annual estimates. Non-tax revenue stood at 2.66 trillion or 88.1% of annual estimates.

Corporate tax collections rose over 17% year-on-year to 4.82 trillion during the period under review. Total expenditure rose to 23.94 trillion, or 53.2% of the annual estimates, from 21.44 trillion in the corresponding period in FY23.

While the central government has accelerated coverage and extended tenures of its flagship welfare programmes ahead of the upcoming general elections, experts don’t expect the government to exceed its spending targets during the ongoing fiscal.

“After considering the additional economic cost towards the extension of free foodgrains under the NFSA for January-March 2024, the higher subsidy on LPG, the nutrient-based subsidy rates on P&K fertilisers for the ongoing rabi season, and the additional amount likely to be required for MGNREGS, we estimate spending to exceed the FY2024 budget estimates by 0.8-1.0 trillion," said Aditi Nayar, chief economist, head research and outreach, ICRA Ltd.

“However, this sum could be matched by expenditure savings, which have ranged between an estimated 1.1-2.3 trillion in recent years. As a result, we foresee a low risk of the fiscal deficit target of 5.9% of GDP being breached," Nayar added.

In August, Mint reported that the central government was unlikely to meet its divestment target of 51,000 crore for the current fiscal year.

However, it expects higher non-tax revenue, including dividends from the Reserve Bank of India (RBI) and state-run banks, to offset any revenue shortfall from disinvestment and maintain the fiscal deficit target for FY24.

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.

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Published: 30 Nov 2023, 08:04 PM IST
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