The Centre has exhausted its entire Budget allocation for 12 months on food and urea in just eight months — in April-November — per data revealed by the Controller General of Accounts (CGA) on Thursday.
Data also showed that fiscal deficit for the eight-month period has touched 135 per cent of the Budget Estimate (BE). It was around 115 per cent during the corresponding period of FY20.
The government had provided over ₹1.15-lakh crore for food subsidy in the Budget. CGA data show the total food subsidy spent during April-November was over ₹1.16-lakh crore, which is 101 per cent of the BE.
Similarly, due to better kharif and rabi sowing, demand for urea picked up and so did that subsidy bill. The government spent over ₹50,000 crore in eight months on fertilizer subsidy, which is over 104 per cent of the BE.
Meanwhile, as net revenue receipts is just 37 per cent of the BE and expenditure nearly 63 per cent, fiscal deficit during April-November crossed ₹10-lakh crore, against a BE of ₹7.96-lakh crore.
According to Anil K Sood, Professor at the Institute for Advanced Studies in Complex Choices (IASCC), monthly expenditure data suggests that the government is continuing to shy away from investing in the economy. He said that the cumulative capital expenditure is up by 12.8 per cent during the year so far, when compared with the last year, which is an increase of ₹. 27,316 crore – a worryingly small increase given that it is a pandemic year, where the private and household investment has collapsed. If we exclude the loan disbursements by the central government, the increase in capital expenditure is just ₹3,549 crore.
“In a way the government seems to be absolving itself of the responsibility to support the economy when the households and private sector, particularly the small-medium businesses, are struggling to sustain their expenditure and investment. It is disappointing to say the least,” he said.
Aditi Nayar, Principal Economist with ICRA said that latest deficit number is 33 per cent higher than the year ago level, and 35 per cent higher than the full year budget estimate. “The month of November 2020 saw a sharp and encouraging ramping up of the Government of India's spending, with the monthly outgo recording a YoY expansion of 32 per cent for revenue expenditure and nearly 250 per cent on a small base for capital expenditure. A sustenance of this trend will bolster economic activity, and help the Indian economy exit the recession in the coming quarter,” she said.
She has estimated the total expenditure (excluding recovery of loans) at ₹. 30.42 lakh crore during current fiscal mildly lower than the budgeted level, despite the fiscal support measures that have been announced so far. This translates into a projected expenditure of ₹. 11.3 lakh crore in the last four months of current fiscal, which is a considerable 31 per cent higher than the outgo in the same period of FY2019-20, and therefore may prove to be challenging to achieve.