Fiscal deficit widens to 83% of budget estimate

NEW DELHI: With lockdown measures badly hitting the government’s revenue collection and expenditure shooting through the roof, India’s fiscal deficit widened to Rs 6.62 lakh crore in the April-June quarter, accounting for 83.2% of the target for the whole financial year. 

The deficit is unusually high for a quarter, say experts.  “Our baseline estimate is that the fiscal deficit will surge to Rs 13 lakh crore in FY21 from the budgeted level of Rs 8.0 lakh crore. This anticipated fiscal slippage, even in our base case scenario, exceeds the extent by which the Centre’s market borrowings have already been increased,” said Aditi Nayar, principal economist at ICRA.

As expected, revenue collection remained subdued. Data released by the Controller General of Accounts (CGA) on Friday revealed that the net tax receipts were Rs 1.35 lakh crore, compared to Rs 2.51 lakh crore in the same period last year. For the quarter, tax revenues were at 8% of the full year target of Rs 16.35 lakh crore, while non-tax revenues were at only 4% of the full fiscal target of Rs 3.85 lakh crore. 

ICRA has predicted the net tax revenues of the Centre, non-tax revenues and disinvestment proceeds to together trail the budgeted level by more than Rs 6 lakh crore. In the same period, total expenditure was Rs 8.16 lakh crore as the government front-loaded spending on many accounts including the direct benefit scheme, free food grain supply and Ujjwala programme. Expenditure rose 13% over three months to Rs 8.16 lakh crore, compared to Rs 7.22 lakh crore last year.

Fiscal deficit had already touched a seven-year high at 4.6% of the GDP for 2019-20. The government has already increased its market borrowings target to Rs 12 lakh crore for the current fiscal year from earlier estimates of Rs 7.8 lakh crore to fund some portion of its budget spending. a