The Central Government’s fiscal deficit for the April-November period touched 99 per cent of the Budget estimate for 2014-15. The fiscal deficit is the difference between the Government’s earnings and expenditure.
Data released by the Controller General of Accounts on Wednesday showed that the deficit in the first eight months of the financial year touched ₹5.25 lakh crore, against the Budget target of ₹5.31 lakh crore. In percentage terms, the deficit is 98.9 per cent, against 93.9 per cent in the same period last year.
The Government managed to collect just 43.4 per cent of estimated receipts, while its expenditure was 59.8 per cent.
Among receipts, tax collection stood at 42.3 per cent of the Budget estimate.
The Government apprehends that tax targets, especially indirect tax (customs, excise and service tax), might not be met. But it hopes that a boost in the manufacturing sector will help reduce the shortfall of ₹83,000 crore in tax revenue. It has already initiated moves such as hiking excise duty on petrol and diesel, as well as on edible oils, besides rolling back duty benefits on automobiles and consumer durables. These measures alone are expected to mop up around ₹14,000 crore. However, there are apprehensions that the Government might go for expenditure cuts.
Aditi Nayar, senior economist with ICRA, said that while the pick-up in tax revenue growth in November is encouraging and higher excise on petrol and diesel would provide buoyancy, substantial shortfalls in tax collections are inevitable.
“Some expenditure prioritisation will be required to offset the shortfall. Restricting the deficit to 4.1 per cent of GDP will also hinge on the inflows garnered from disinvestment,” she said.