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Fiscal deficit for the first nine months of the current fiscal, that is April-December, has crossed 112 per cent of the Budget Estimate. Experts believe that this is likely to put pressure on even the Revised Estimate of the deficit.
Fiscal deficit is the gap between income and expenditure of the government. Initially, the government pegged the deficit at 3.3 per cent of the GDP for the current fiscal. This has been revised to 3.4 per cent of GDP in the Interim Budget presented on February 1. Stand-in Finance Minister Piyush Goyal said the hike is on account of allocation of ₹20,000 crore for income support scheme for the farmers. Had it not been for the support, the government would have limited the deficit to the target, he claimed.
Meanwhile, the latest number, released by the Controller-General of Account on Monday, showed that fiscal deficit for the first nine months is more than ₹7.01 lakh crore as against the Budget Estimate of ₹6.24 lakh crore. This is 112.4 per cent of the Budget Estimate while similar number for the corresponding period of 2017-18 was 113.6 per cent. The real problem is being seen on account of tax, where the government has managed to mobilise little over 63 per cent of the Budget Estimate. One of the reasons here is lower-than-expected GST collections.
On the other hand, expenditure appears to be on track with 75 per cent in three quarters. Here the capital expenditure is over 70 per cent while revenue expenditure is over 75 per cent of the Budget Estimate. Experts feel that the government might roll over some of the expenditure to stick to the fiscal consolidation path.
Devendra Kumar Pant, Chief Economist at India Ratings and Research (Ind-Ra), said the pressure is more visible on the revenue side rather than on the expenditure side. In order to meet FY19(RE), monthly revenue receipts during January-March 2019 has to be 1.8 times of average monthly collections in nine months which appears difficult to achieve.
He also said the government has some buffer in capital expenditure, the difference in capital expenditure between Financial Year 2019 (RE) and nine months of the current fiscal is ₹1.05 lakh crore translating in average run rate of ₹34,900 which is nearly 1.5 times of monthly run rate of nine months.
“In March 2018, the capital expenditure was negative. Capex in financial year 2019 has declined from ₹31,900 crore in first quarter to ₹24,300 crore in the second quarter and further to ₹16,400 crore in the third quarter. Assuming the fourth quarter 2019 capex to be same as of third quarter, the government has a buffer of ₹55,600 crore to take care of any revenue shortfall,” he said.
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