Fiscal Deficit Till February At 83% Of Full-Year Target

The Union government's fiscal deficit for the April 2022–February 2023 period widened to 82.8% of its target for the full fiscal.

The deficit of Rs 14.53 lakh crore till February is against the government's revised estimate of Rs 17.55 lakh crore in fiscal 2023, the Controller General of Accounts said on Friday.

The government's fiscal deficit target for the full fiscal is set at 6.4% of the gross domestic product.

According to Aditi Nayar, chief economist at ICRA Ltd., the fiscal deficit would not sharply exceed the revised target despite some deviations from the revised estimates for corporation tax, disinvestment receipts and certain categories of expenditures following the supplementary demand for grants.

It is modestly higher than Rs 13.2 lakh crore in the first 11 months of FY22, with net tax revenues reporting a healthy growth of 17%, amid a 20% contraction in non-tax revenues, 9% rise in revenue expenditure, and a healthy 22% expansion in capex, said Nayar.

Revenue receipts reported at 84.3%, or Rs 19,80,828 crore, against a revised estimate target of Rs 23,48,413 crore. At 86.2%, the percentage was higher at the same time last year, though the receipt expectation in actual terms is also higher this fiscal than the previous year.

The net tax revenue stands at Rs 17,32,193 crore or 83% of the full year target, while non-tax revenue is Rs 2,48,635 crore or 95% of its target in FY23.

Nayar highlighted that the growth in the gross tax revenues slowed to 4.5% in February, dampened by corporation tax and excise duty. Gross tax revenues need to grow by 14% on a year-on-year basis in March 2023 to meet the revised estimates, including a 32% expansion in corporation tax, which "seems somewhat optimistic", she said.

Capital expenditure seems to be lagging at Rs 5,90,227 crore or at 81.1% of a target of Rs 7,27,768.

"The balance capital spending needed to meet the FY23 revised estimates is an optimistic 28% higher than the actual capex incurred in March 2022, whereas the balance revenue spending is a mild 2.5% higher than the year-ago level," Nayar said.

The government target for fiscal 2024 is set at an ambitious figure of Rs 10 lakh crore, jumping 33% from the originally-budgeted Rs 7.5 lakh crore in fiscal 2023.

The total expenditure stood at Rs 34,93,590 crore or 83.4% of the target of Rs 41,87,232 in FY23. On a monthly basis, there seems to be a dip of 3% with revenue expenditure rising 5%.

Interest payments so far were seen at Rs 7.98 crore and the spend on major subsidies at Rs 4.59 crore for FY23.