Under control: fiscal deficit at 68% of Budget estimate

Strong growth in revenue collections helped the Centre keep the fiscal deficit well within control at ₹3,78,563 crore, or 68.1 per cent of the Budget Estimate (BE), in the first half of 2015-16 despite spending heavily on public investments.

Both the fiscal and revenue deficits were significantly higher in the first half of 2014-15 at 82.6 per cent and 91.2 per cent of the Budget Estimates, respectively. Officials attributed this trend to improved advance tax payments in the second tranche and buoyant indirect tax collections from higher excise and customs duties.

The revenue deficit amounted to ₹2,69,008 crore or 68.2 per cent of the Budget Estimate on September 30, according to data released by the Controller General of Accounts on Friday.

Capital spending up Capital spending, which is a key focus area of the government this fiscal year as a means to spur economic growth, was robust in the first half of the fiscal. The Finance Ministry on Friday also reviewed the capital spending plans of public sector units and asked them to expedite and finish all projects by the end of the fiscal year. Plan Expenditure on the Capital Account shot up to ₹82,818 crore or 61.2 per cent of the full-year target as against a mere ₹51,542 crore in the same period last fiscal year.

Overall expenditure touched ₹9,10,545 crore or 51.2 per cent of the full-year target. Plan expenditure jumped to ₹2,53,816 crore or 54.6 per cent of the BE between April and September 2015 as against 43 per cent of the BE in the same period a year ago.

The drinking water and sanitation, coal, civil aviation, heavy industries, petroleum and natural gas and road transport and highways ministries registered heavy Plan spending.

Meanwhile, non-Plan spending was at ₹6,56,729 crore, which is half the Budgeted target for this fiscal year.

Revenue collections, too, picked up pace by September 30 at ₹5,13,369 crore or 45 per cent of the Budget Estimate as against 35.1 per cent of the estimate in the corresponding period a year ago.

Tax collections in the first half of the fiscal year amounted to ₹3,69,736 crore or 40.2 per cent of the Budget Estimate as against 33.1 per cent of the estimates a year ago.

Collections of both excise and customs duties crossed the ₹1-lakh-crore mark in the first six months of the fiscal year as against ₹60,547 crore and ₹87,408 crore, respectively, on September 30, 2014.

The data will give comfort to the Finance Ministry, which has been concerned about a shortfall in disinvestment proceeds this fiscal year.

Finance Minister Arun Jaitley had said recently that the fiscal deficit target of 3.9 per cent of GDP for 2015-16 would be met.

Analysts, too, expect the fiscal deficit target to be met.

“The fiscal deficit in 2015-16 will be as budgeted. We had expected a shortfall on disinvestment but this will be met by better tax collections and savings on the fuel subsidy,” said DK Joshi, Chief Economist, Crisil.