In just two months, the fiscal deficit — the gap between income and expenditure for the government — has consumed over half of the annual Budget Estimate, data released on Friday revealed. However, it is still less than the previous year.
Controller General of Accounts (CGA), the book keeper of the Central Government, made monthly account public which showed that the fiscal deficit during April-May reached ₹3.66 lakh crore, which is 52 per cent of the Budget Estimate of ₹7.03 lakh crore. The gap as a percentage of GDP for fiscal 2018-19 was little more than 53 per cent. The government earned little over 7 per cent, which is similar to last fiscal, but expenditure was more than 18 per cent, one percentage point less than 2017-18.
Out of total expenditure, revenue expenditure is little less than one fifth of the Budget Estimate, similar to last fiscal. But, the problem is capital expenditure, which has come down to 14.2 per cent, as against 21.3 per cent during last fiscal. Revenue expenditure refers to expenses on salary, subsidy etc while capital expenditure means public investment. Experts feel that private investment is already low, if public investment also slows down, then that will create more problem for the economy.
The government aims to limit the fiscal deficit to 3.4 per cent of the GDP. It was announced in the Interim Budget as presented on February 1. However, the problem is that the government has decided to expand PM-Kisan scheme to cover all farmers and also launching pension scheme for farmers and traders. All these require additional expenditure which could go up to ₹ 25000 crore. At the same time, tax position is precarious and there is possibility of lowering tax collection target in the full budget to be tabled on July 1. In such a situation, it will be really challenging for the Finance Minister Nirmala Sitharaman to stick to deficit target.
Between 2014-15 and 2016.17, fiscal deficit used to be in the range of 38 to 45 per cent but surged to over 68 per cent in 2017-18 and then settled around 52-53 per cent during last fiscal and this fiscal. Since 2017-18 budget was presented on the first day of February as against last day and entire budget process was completed by March 31, it enabled Ministries and Departments to ensure better planning and execution of schemes from the beginning of the financial year and utilization of the full working seasons including the first quarter.
This was the reason that deficit numbers started surging from 2017-18 and the trend is continued.