India's Q1 FY24 fiscal deficit at ₹4.51 trillion, 25% of annual target

New Delhi: The government’s fiscal deficit for April-June, the first quarter of the current fiscal (FY24), stood at ₹4.51 trillion, accounting for 25.3% of annual estimates, according to government data released on Monday.

The fiscal deficit reported during the quarter ended 30 June 2023 widened from 21.2% in the year-ago period.

This was largely due to a sharp jump in capital expenditure, accelerated tax devolution to the state governments, and offsetting the sharp jump in non-tax revenues.

Capex rose to ₹2.78 lakh crore during the June 2023 quarter, up from ₹1.75 trillion during the same period of the previous year.

Total receipts during April-June stood at ₹5.99 trillion, or 22.1% of the annual estimates, of which tax receipts stood at ₹4.3 trillion, or 18.6% of annual estimates.

Total expenditure rose to ₹10.5 trillion, or 23.3% of the annual estimates from ₹5.86 trillion a year ago.

The Centre aims to bring down the fiscal deficit, which is the difference between the government’s income and spending, to 5.9% of the gross domestic product during FY204.

"In Q1 FY2024, the government of India's fiscal deficit jumped to ₹4.5 trillion or 25.3% of the FY2024 BE, from ₹3.5 trillion in the first three months of FY2023, with a surge in capex and accelerated tax devolution to the state governments, offsetting the sharp jump in non-tax revenues," said Aditi Nayar, chief economist, head - Research & Outreach, Icra Ltd.

In May 2023, the Reserve Bank of India (RBI) had approved transfer of ₹87,416 crore as dividend to the government for FY2023.

"While net tax revenues reported a contraction of 14%, non tax revenues surged by 149% boosted by the RBI dividend, amidst a flattish revenue expenditure, and a 59% YoY expansion in capex," Nayar added.

Of the total revenue expenditure, which stood at ₹7.72 trillion at the end of the June quarter, ₹2.44 trillion was on account of interest payments and ₹87,035.14 crore went into subsidies.