The central government’s fiscal deficit at the end of May 2023 stood at 11.8 per cent of the full-year budget estimates for 2023-24, according to the latest official data released on Friday. The fiscal deficit had stood at 12.3 per cent of the 2022-23 BE in the corresponding period a year ago.
In absolute terms, the fiscal deficit was Rs 2,10,287 crore at end-May 2023, according to the data from the Controller General of Accounts (CGA).
Fiscal deficit, which is the difference between the total expenditure and revenue of the government, is an indication of the total borrowings that are needed by the government.
In the Union Budget, the government aimed to bring down the fiscal deficit during the current financial year 2023-24 to 5.9 per cent of the gross domestic product (GDP). The deficit was 6.4 per cent of the GDP in 2022-23 against the earlier estimate of 6.71 per cent.
Unveiling the revenue-expenditure data of the Union government for the first two months of the 2023-24, CGA said the net tax revenue was Rs 2.78 lakh crore or 11.9 per cent of the BE. Its total expenditure was Rs 6.25 lakh crore or 13.9 per cent of the estimates presented in the Union Budget for the current fiscal.
As per the Budget, the fiscal deficit in end-March 2024 is estimated at Rs 17.86 lakh crore.
Aditi Nayar, chief economist and head (research & outreach) at ICRA, said, “In April-May 2023, the Government of India’s fiscal deficit rose modestly to Rs 2.1 lakh crore or 11.8 per cent of the FY2024 BE, from Rs 2 lakh crore in the first two months of FY2023, with the sharp jump in non-tax revenues and compressed revenue spending offsetting the robust increase in capex and decline in net tax revenues.”
She added that while tax revenues reported a contraction of 9.6 per cent, non tax revenues surged by 173 per cent boosted by the RBI dividend, amidst a 4.3 per cent decline in revenue expenditure, and a 56.7 per cent YoY expansion in capex. While fiscal concerns appear limited and the MPC seems unlikely to raise policy rates further in the immediate term, higher state government borrowings in the coming quarter could keep the 10-year G-sec yield in a range of 7.0-7.2 per cent in the remainder of H1 FY2024.
Nayar also said gross tax collections rose by a mild 4.4 per cent YoY in May 2023, amid a sharp 17.6 per cent contraction in corporate tax collections, offsetting the buoyancy in GST collections. The weakness in corporate tax collections has dragged down tax revenues during April-May 2023.
(With Inputs from PTI)
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