Better revenues to cushion FY21 fiscal deficit 

NEW DELHI:  The Finance Ministry is expecting to post a lower fiscal deficit in the financial year 2020-21 on account of better than expected revenue collection, higher dividend by the central public sector enterprises and prudent expenditure.

FY21In the Budget speech, Finance Minister Nirmala Sitharaman had revised the fiscal deficit target for the current fiscal year to Rs 18.49 lakh crore, or 9.5 per cent of the real gross domestic product (GDP), compared to the budget estimates of Rs 7.96 lakh crore or 3.5 per cent of GDP. Sources, however, say that the number could come in below nine per cent. 

“Many parameters have improved and we expect the fiscal deficit to be 9 per cent or even below. The government has taken several measures to stick to fiscal prudence,” a senior official from the finance ministry said. The April-February fiscal deficit was 76 per cent of the revised estimates. In actual terms, the deficit stood at Rs 14.05 lakh crore, as compared with the revised estimate of Rs 18.48 lakh crore. Even though the final settlement in March may change many figures, there is optimism in the finance ministry that it will surely be below the revised estimates.

“Both direct and indirect tax receipts in February and March have been robust and this has helped the government to exceed its revised estimates made at the time of presenting the Union budget for FY22” Department of Economic Affairs Secretary Tarun Bajaj said in a media interaction post publication of the GST numbers on Thursday. GST collections rose 27 per cent to hit a record high of nearly Rs 1.24 lakh crore in March. To be sure, GST collections have remained above 1 lakh crore for six consecutive months in a row. Bajaj, who is also taking additional charge of revenue secretary, said that the momentum will continue on account of better compliance and  improving economy.

Besides, the prudent expenditure is also likely to help the government to achieve its fiscal goal. Official data shows, the Centre’s total expenditure was Rs 28,18,643 crore or 81.7 per cent of the revised estimate as compared to 91.4 per cent last year.