With continuous policy of front-loading development expenditure, the Centre’s fiscal deficit has exceeded half of the Budget target during the first three months (April-June) of the current fiscal. However, the good news is that tax collection has also seen good growth.
Fiscal deficit is the difference between the government’s income and expenditure.
Latest data from the Controller General of Accounts, the book keeper of the Government, showed that fiscal deficit touched nearly 52 per cent of the Budget estimate which was ₹5.56 lakh crore. However, this is lower than the deficit ratio (56 per cent) during the corresponding period of the pervious fiscal.
Finance Ministry officials are confident that fiscal deficit target, which is 3.9 per cent of Gross Domestic Product, will not exceed.
“Normally first quarter sees lesser revenue as tax authorities have to face higher return in both direct and indirect tax. We feel that with better-than-expected monsoon and recovery in manufacturing, there will more revenue generation. This, coupled with lower subsidy payout, will benefit the overall finance,” a senior Finance Ministry official told BusinessLine .
The official also highlighted two key positives in the entire data.
First, tax collection registered a good growth and net collection reached over 11 per cent of the Budget estimate during first three months as against 10 per cent during the corresponding period of last fiscal. Similarly, developmental expenditure (technically known as Plan Expenditure) reached nearly 25 per cent of the Budget estimate as against little over 19 per cent in previous fiscal.
More Plan Expenditure means, public investment in various developmental projects is increasing. This could motivate private investors to put more money.
Non-Plan Expenditure, which comprises subsidy, salary and other recurring expenses, touched 24.1 per cent of the Budget estimate during April-June period as against 24.7 per cent during the corresponding period of the previous fiscal.