India Restricts Fiscal Deficit To Targeted 6.4% Of GDP In FY23
Higher-than-expected revenue receipts help offset a divestment miss and meet capex outlay.
India met the revised fiscal deficit and capex outlay as higher-than-estimated tax revenue offset the divestment shortfall, according to provisional data.
The deficit stood at Rs 17.33 lakh crore for the full year, against the government's revised estimate of Rs 17.55 lakh crore, according to unaudited numbers released on Wednesday. This accounts for 6.4% of the GDP, the target for the full fiscal.
Economists had predicted that the fiscal deficit would not sharply exceed the revised estimates despite some deviations in corporation tax, disinvestment receipts, and certain categories of expenditures following the supplementary demand for grants.
The government was able to restrict its FY23 fiscal deficit to the targeted level owing to higher-than-estimated revenue receipts and a small undershooting in revenue expenditure, offsetting the disinvestment miss and a healthier-than-expected capex, said Aditi Nayar, chief economist at ICRA Ltd.
Divestment Miss Pulls Down Capital Receipts
The government's total tax revenue stood at Rs 20.97 lakh crore, against a revised estimate target of Rs 20.86 lakh crore. Meanwhile, non-tax revenue came in at Rs 2.86 lakh crore, or 109.3% of the targeted estimate.
Divestment mop-up, however, impacted the non-debt capital receipts, with the government reaching 86.5% of the revised estimates at Rs 72,187 crore.
Against the disinvestment target of Rs 50,000 crore, the government mopped up Rs 35,343 crore.
Capex Surge And Expenditure
Net tax revenues reported a healthy growth of 15.2% amid a 17.8% contraction in non-tax revenues, a 7.8% increase in revenue expenditure, and a robust 24.2% expansion in capex, Nayar said.
She explained that the growth in gross tax revenues rose to a considerable 16.8% in March 2023, boosted by corporation tax and personal income tax.
Moreover, total expenditure grew 7% year-on-year in March, led by a healthy 36% expansion in capital expenditure amid a mild 1% rise in revenue expenditure, she said.
The government's total expenditure in FY23 stood at Rs 41.88 lakh crore, in line with its revised target of Rs 41.87 lakh crore. Of the total revenue expenditure, Rs 9.28 crore is on account of interest payments, and Rs 5.30 crore is on account of major subsidies.
Capital expenditure stood at Rs 7.36 lakh crore, or 101.2% of the revised estimate. While FY23 saw a 33% jump in capex outlays, spending reached 81.1% in February. March alone saw a capex of Rs 4.01 lakh crore.