The country’s fiscal deficit shot up to Rs 7.15 lakh crore at February-end, exceeding the revised target of Rs 5.94 lakh crore for the entire 2017-18 fiscal. Fiscal deficit for April-February period was 120 per cent of the revised estimates (RE) on account of increased expenditure and subdued non-tax revenue collections, as per data released by the Controller General of Accounts (CGA) on Wednesday.
While adherence to the fiscal deficit target will be known after the data for March comes in, analysts said the high absolute number till February will erase some of the recent gains recorded in the bond market. The monthly account till February-end revealed that the government has collected Rs 12.83 lakh crore revenue, which is 79.10 per cent of revised estimates. Of this, over Rs 10.35 lakh crore is collected from taxes, while over Rs 1.42 lakh crore and Rs 1.05 lakh crore accrued on account of non-tax revenue and non-debt capital receipts, respectively.
The extent to which the non-tax revenues can be shored up in March 2018 would crucially determine if the actual fiscal deficit for FY18 breaches RE of Rs 5.94 lakh crore. “With the fiscal deficit up to February 2018 equivalent to 120 per cent of the revised estimate for FY18, G-sec yields are likely to rise to an extent, reversing some of the easing recorded after the announcement of the FY2019 borrowing calendar,” said Aditi Nayar, principal economist at rating agency ICRA.
“Both corporation tax and income tax displayed a robust growth of 33.7 per cent and 19.7 per cent, respectively, in February 2018. (But) the low 2 per cent growth in the gross tax collections for the month of February 2018 appears to have been dampened on account of the cross utilisation of IGST credit for the payment of CGST and SGST as well as interstate transactions,” she said.
Non-debt capital receipts consist of recovery of loans of Rs 13,301 crore. Besides, Rs 92,493 crore has been mopped up through PSU disinvestment till February-end. In the revised estimates of 2017-18, the government had raised the disinvestment target to Rs 1 lakh crore, up from Rs 72,500 crore in the Budget estimates. In 11 months till February, over Rs 5.29 lakh crore has been transferred to state governments as devolution of share of taxes by the Centre, which is Rs 66,039 crore higher than the corresponding period of last year 2016-17.