Centre's fiscal deficit touches 59% of full-year target in Nov-end

The government’s fiscal deficit in end-November touched 59 per cent of the full year Budget Estimate (BE) on increased capital expenditure and slow growth in non-tax revenue, according to Finance Ministry data released on Friday (December 30).

In actual terms, the fiscal deficit, which is the difference between expenditure and revenue, was ₹9.78 lakh crore during the April-November period of 2022-23. In the corresponding period last year, the deficit was 46.2 per cent of the Budget Estimates of 2021-22.

The government has budgeted a fiscal deficit of ₹16.61 lakh crore or 6.4 per cent of the GDP in the current year ending March 2023. The deficit is funded by market borrowings.

Net tax revenue

As per the Controller General of Accounts (CGA) data, the net tax revenue at ₹12.24 lakh crore was 63.3 per cent of BE 2022-23. During the corresponding period of 2021-22, the net tax revenue was 73.5 per cent of that year’s BE.

Non-tax revenue was at ₹1.98 lakh crore or 73.5 per cent of BE. In the last fiscal, the collection was 91.8 per cent of BE.

The Union government’s total expenditure during April-November works out to be 61.9 per cent of BE 2022-23, higher than 59.6 per cent of BE in the  year-ago period. Capital expenditure was at ₹4.47 lakh crore or 59.6 per cent of BE between April-November. In the last fiscal, capex was 49.4 per cent of BE.

ICRA projection

Commenting on the data, Aditi Nayar, Chief Economist, ICRA, said that in April-November FY23, the fiscal deficit widened considerably to ₹9.8 lakh-crore, with net tax revenues reporting a moderate growth of 8 per cent, amidst an 11 per cent contraction in non-tax revenues, 11 per cent rise in revenue expenditure, and high 63 per cent expansion in capex

ICRA expects the government’s gross tax revenues in FY23 to exceed the BE by a considerable ₹3.1 lakh-crore and the total expenditure to exceed the BE by ₹2.3 lakh-crore.

“We expect the total receipts of the GoI in FY2023 to exceed the BE by an aggregate of Rs 1.5 lakh crore. Based on this, we estimate the extent of overshoot in the fiscal deficit at around Rs 0.8 lakh crore for FY2023. As a proportion of GDP, the fiscal deficit in FY2023 is unlikely to exceed the FY2023 BE of 6.4 per cent,” Nayar said.

As per the CGA data, the central governments total receipts, including non-tax revenue, stood at Rs 14.64 lakh crore or 64 per cent of the current years BE. In the year-ago period, the total receipts had touched 69.8 per cent of BE 2021-22.

With agency inputs