The Centre's fiscal deficit in the first four months of FY24 stood at 33.9% of the annual target, sharply higher than 20.5% a year before. Of course, the deficit until July is still way below the five-year average of 69%. Capex jumped nearly 52% between April and July from a year earlier to ₹3.17 lakh crore, higher than the budgeted annual rise of about 36%.
New Delhi: The Centre has no plan to scale down capital spending from the record ₹10 lakh crore budgeted for FY24 even as it would reprioritise certain revenue expenditures while aiming to restrict its fiscal deficit within the target of 5.9% of gross domestic product (GDP), a senior official said.
As the finance ministry calls on departments to submit their statements of budget and expenditure trends by October 5, a significant part of the likely additional spending under select schemes in FY24 could be met through savings from some others and compression of certain less important revenue expenditures, the official indicated to ET.
"The central government wanted departments to front-load capital expenditure (capex) this fiscal to keep up its push for growth. There is no plan to cut capex. States are also being encouraged to fully utilise their share of the Centre's budgeted capex outlay for FY24," he added.
Of the ₹10 lakh crore capex outlay for FY24, the Centre has pledged ₹1.3 lakh crore as long-term, interest-free loans to states to boost their durable asset creation.
The Centre's fiscal deficit in the first four months of FY24 stood at 33.9% of the annual target, sharply higher than 20.5% a year before. Of course, the deficit until July is still way below the five-year average of 69%. Capex jumped nearly 52% between April and July from a year earlier to ₹3.17 lakh crore, higher than the budgeted annual rise of about 36%.
Revenue expenditure rose 15.9% year-on-year until July this fiscal to ₹10.64 lakh crore, way above the targeted annual increase of 1.5%, partly due to a 59% jump in fertiliser subsidy from a year before.
Meanwhile, net tax revenues for the Centre dropped 12.6% until July this fiscal to ₹5.83 lakh crore.
These factors have prompted some analysts to warn of fiscal slippage, especially as they expect welfare expenditures to rise further ahead of the 2024 general elections, unless the government trims capex.
"We believe more measures are in the pipeline on exports/imports, but could also include an extension of government's free food programme and possible compensation to farmers through higher procurement or income support," economists at Nomura said late last month.
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