Fiscal deficit for the April-October period crossed the 2018-19 target of Rs 6.24 trillion. It stood at Rs 6.49 trillion, or 103.9 per cent of the full-year target, compared to 96.1 per cent for the same period last year, official data showed on Friday, primarily on the back of lower tax revenue and higher capital expenditure.
This puts pressure on Finance Minister Arun Jaitley’s stated commitment of meeting the fiscal deficit target of 3.3 per cent of gross domestic product (GDP) without cutting capital expenditure, in a year when goods and service tax (GST) collections are expected to fall short of the overall target of Rs 13 trillion.
Additionally, with the GDP data of the July-September quarter available, the fiscal deficit for the first half of 2018-19 stood at 6.61 per cent of the GDP.
The April-October fiscal deficit data showed that the revenue receipts of the government totalled Rs 7.88 trillion or 45.7 per cent of the full-year budgeted estimates compared with 48.1 per cent for the same period last year. Tax revenue was 44.7 per cent of budget estimates compared with 51.6 per cent achieved in the comparable period of the last year.
Total expenditure of the government at October-end was Rs 14.56 trillion or 59.6 per cent of budgeted estimates. The expenditure as a percentage of the budgeted target was marginally higher in the year-ago period. Capital expenditure for April-October was 59 per cent of the full-year target, compared to 52.6 per cent for the same period last year.
“While expenditure continues to grow, total receipts in October 2018 shrank from October 2017. Non-debt capital receipts in April-October 2018 are nearly half of April-October 2017. Based on first half GDP growth at 7.1 per cent and likelihood of lower growth in the second half, the chances of fiscal slippage are very high. We expect FY19 fiscal deficit to be 3.5 per cent of the GDP,” said Devendra Pant, chief economist, India Ratings.
Madan Sabnavis, chief economist of Care Ratings, said that the Centre meeting the fiscal deficit target will be contingent upon realisation of the disinvestment target of Rs 800 billion and higher GST collections. “Nevertheless, the government has lowered its gross borrowings programme by Rs 700 billion which will enable them maintain the fiscal deficit target of 3.3 per cent,” Sabnavis said.