India's Fiscal Deficit Reaches 45% of Target in October

New Delhi, Nov 30 (PTI) The government's fiscal deficit at the end of October stood at Rs 8.03 lakh crore or 45 per cent of the full-year budget estimate, according to data released by the Controller General of Accounts (CGA) on Thursday.

In actual terms, the fiscal deficit -- the difference between expenditure and revenue -- was at Rs 8.03 lakh crore during the April-October period of 2023-24.

In the corresponding period last year, the deficit was at 45.6 per cent of the budget estimates of 2022-23.

For 2023-24, the fiscal deficit of the government is estimated to be at Rs 17.86 lakh crore or 5.9 per cent of the GDP.

The Government of India received Rs 15.9 lakh crore (58.6 per cent of corresponding BE 2023-24 of total receipts) up to October 2023 comprising Rs 13.01 lakh crore tax revenue (net), Rs 2.65 lakh crore of non-tax revenue and Rs 22,990 crore of non-debt capital receipts.

Non-Debt capital receipts consists of recovery of loans (Rs 14,990 crore) and miscellaneous capital receipts (Rs 8,000 crore).

As per the CGA data, total expenditure incurred by the central government was at Rs 23.94 lakh crore (53 per cent of corresponding BE 2023-24) during April-October 2023.

Out of the total expenditure, Rs 18,47,488 crore was on revenue account and Rs 5,46,924 crore was on capital account.

Aditi Nayar, Chief Economist at credit rating agency ICRA Ltd, said that in October, capex declined by 15 per cent on a year-on-year basis, which helped to contain the fiscal deficit at the end of the seven-month period.

"After considering the additional economic cost towards the extension of free foodgrains under the NFSA for January-March 2024, the higher subsidy on LPG, the nutrient based subsidy rates on P&K fertilisers for the ongoing rabi season, and the additional amount likely to be required for MGNREGS, we estimate spending to exceed the FY2024 BE by Rs 0.8-1 lakh crore," she said.

Vivek Jalan, Partner at multi-disciplinary tax consultancy Tax Connect Advisory, said that reducing fiscal deficit number at this point in the year gives a better bandwidth to the government to present a good interim budget and vote on account in February 2024.

"It seems that the benefits of the good fiscal deficit numbers will certainly be passed on to the middle class as the government looks to consolidate its position before the elections in 2024," he said.

According to the CGA data, the Government of India has transferred Rs 5,28,405 crore to state governments as devolution of share of taxes up to October 2023, which is Rs 93,966 crore higher than the previous year.

Out of the total revenue expenditure, the CGA data showed that Rs 5,45,086 crore was on account of interest payments and Rs 2,31,694 crore on account of major subsidies.

Continuing the path of fiscal consolidation, the government intends to bring the fiscal deficit below 4.5 per cent of GDP by 2025-26.