Ahead of the Interim Budget, two high frequency economic indicators sent mixed signals. While GST collection surged to second all-time high of over ₹1.72-lakh crore in January and fiscal deficit reached 55 per cent of budget estimate in April-December period, eight core industries’ output growth slumped in December 2023 to a 14-month low of 3.8 per cent.

GST revenue for January 2024 surged to ₹1.72 lakh crore, reflecting an impressive 10.4 per cent Year-on-Year growth. This is the second-highest monthly collection ever and the third instance in the fiscal year 2023-24 where collections have exceeded ₹1.70 lakh crore. Simultaneously, fiscal deficit narrowed from 59 per cent reported in the comparable period a year earlier.

This reflects optimism a day ahead of the interim Budget. “GST collections are in line with the other macroeconomic paramaters which indicate a significant uplift in economic activities, with even the IMF upgrading the growth forecast to 6.7 per cent for FY23-24,” said MS Mani, Partner with Deloitte.

Fiscal Deficit

According to latest data, made public by Controller General of Accounts (CGA), the country’s fiscal deficit for the first nine months of the 2023-24 financial year was ₹9.82-lakh crore or 55 per cent of the estimate for the whole year. The Budget has estimated fiscal deficit at 5.9 per cent of GDP or ₹17.87-lakh crore.

Net tax revenues for the April-December period were ₹17.30-lakh crore, or about 74.2 per cent of the annual estimate, compared with ₹15.56-lakh crore in the same period last year, according to the data. Total expenditure during the period was ₹30.54-lakh crore, or about 68 per cent of the annual estimate, compared with ₹28.18-lakh crore in the same period last year.

In the first nine months of the financial year, government capital expenditure or spending on building physical infrastructure was ₹6.74-lakh crore, or 67.3 per cent of the annual target, higher than ₹4.90-lakh crore in the same period a year earlier.

Core Sector

The core sector’s latest reading was much lower than 8.3 percent growth seen in the same month in the previous year.  It was also lower than 7.9 per cent growth recorded in November 2023. For the April-December 2023 period, core industries growth came in at 8.1 per cent, the same level as the year ago.

In December 2023, other than crude oil, which contracted 1 per cent, all the seven other industries recorded positive growth. The eight core industries —Coal, Natural Gas, Crude Oil, refinery products, fertilizers, cement, steel and electricity — comprise 40.27 per cent of the weight of items included in the Index of Industrial Production (IIP).

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