The fiscal deficit for the first two months of the current FY went above 12 percent of the Budget Estimate, 4 percentage points higher than the deficit during the corresponding period of the previous FY. Experts estimate the fiscal deficit for the whole year to be greater than the Budget Estimate of 6.4 percent for FY23.

 

shineprojects-cash-blog176.webp

 

According to the data, the total receipts of the government at the end of May were ₹3.81-lakh crore or 16.7 percent of the BE for FY23. The collection was almost 18 percent of the BE of FY22 in the corresponding period last FY. In May, the net tax revenue was at 15.9 percent of the BE of FY23. It was 15.1 percent of the BE FY22 in the year-ago period. In actual terms, the net tax revenue stood at ₹3,07,589 crore during April-May. Total expenditure at the end of May stood at ₹5.85-lakh crore or 14.8 percent of this year’s BE. It was 13.7 percent of the BE in the corresponding period. Among the revenue expenditure, fertilizer subsidy, especially for urea, registered high growth. It surpassed ₹10,000 crores in two months as compared to ₹4,829 crores in the corresponding period of the previous fiscal. According to industry sources the government now pays ₹91.96 a kg for urea as compared to ₹18.78 per kg last April. An increase is also seen in nutrient-based subsidies. According to Aditi Nayar, Chief Economist, ICRA, Central tax devolution may overshoot the FY23 Budget Estimates, led by an expected upside in non-excise tax revenues, warranting an early reassessment of the monthly amounts being shared with the States to enable them to boost their spending and support economic growth. She predicts a large part of the higher-than-budgeted subsidies and loss related to excise duty cut to be absorbed by higher-than-estimated non-excise taxes, restricting the extent of the overshoot in the GoI’s fiscal deficit in FY23 to ₹1-lakh crore above the Budget Estimate, even if there are no expenditure savings. Moreover, a higher nominal GDP in comparison to the BE is possible to include the expected fiscal deficit at 6.5 percent of GDP, only slightly exceeding the budgeted 6.4 percent of GDP.

India Ratings and Research believe continued high inflation, leading to higher nominal GDP, is foreseen to help the government achieve its tax collection target of FY23. The Centre has front-loaded CAPEX in FY23, leading to 70.1 percent YoY CAPEX growth in the first two months of FY23. It said that there was no major threat to the government’s fiscal deficit target even though the fiscal deficit is 65.6 percent higher than last year during the first two months of FY23.

  •   
  •   
  •   
  •