The country’s fiscal deficit hit 114.8 per cent of 2019-20 Budget Estimate at Rs 8.07 lakh crore at the end of November, official data showed on Tuesday.
The fiscal deficit or the gap between expenditure and revenue was at Rs 8,07,834 crore as on November 30, 2019, according to the data released by the Controller General of Accounts (CGA). The deficit was at 114.8 per cent of 2018-19 Budget Estimate (BE) in the corresponding month a year ago.
The government has estimated the fiscal deficit for the current financial year at Rs 7.03 lakh crore, aiming to restrict the deficit at 3.3 per cent of the gross domestic product (GDP).
In September, the government decided to lower the tax rate for corporates and has pegged that it will have an impact of Rs 1.45 lakh crore on its revenue mobilisation.
Tax sops were intended to boost the investment cycle in the face of slowing GDP growth, which dipped to a six-year low of 5 per cent in the first quarter of this fiscal. The GDP growth slipped further to an over six-year low of 4.5 per cent in the second quarter ended September.
Due to slowdown, the GST collection has also been subdued putting pressure on overall revenue mobilisation effort of the government.
Faced with a shortfall in revenue collection, the government has initiated austerity measures by revising downwards the expenditure limit for the January-March period of the ongoing financial year.
The government has asked all departments to restrict the expenses to 25 per cent of the Budget Estimate (BE) in January-March. According to official statement, “the Government of India has received Rs 10,12,223 crore (48.60 per cent of corresponding BE 2019-20 of Total Receipts) up to November 2019 comprising Rs 7,50,614 crore Tax Revenue (Net to Centre), Rs 2,32,600 crore of Non-Tax Revenue and Rs 29,009 crore of Non-Debt Capital Receipts.”
Non Debt Capital Receipts consists of Recovery of Loans (Rs 10,910 crore) and Disinvestment Proceeds (Rs 18,099 crore), it said. For the entire 2019-20, the revenue receipts have been pegged at Rs 19.62 lakh crore.
It further said Rs 4,21,850 crore has been transferred to State Governments as Devolution of Share of Taxes by Government of India up to this period which is Rs 10,113 crore lower than the previous year. “Total Expenditure incurred by Government of India is Rs 18,20,057 crore (65.3 per cent of corresponding BE 2019-20), out of which Rs 16,06,215 crore is on Revenue Account and Rs 2,13,842 crore is on Capital Account,” it said.
The government has pegged its total expenditure for 2019-20 at Rs 27.86 lakh crore. Out of the Total Revenue Expenditure, Rs 3,41,812 crore is on account of interest payments and Rs 2,35,015 crore is on account of major subsidies.
The fiscal deficit figure in monthly accounts during a financial year is not necessarily an indicator of fiscal deficit for the year, as per the CGA.
Its data gets impacted by a temporal mismatch between the flow of non-debt receipts and expenditure up to that month on account of various transitional factors both on receipt and expenditure side, which may get substantially offset by the end of the financial year.
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