Fiscal deficit touches 128.5% of Budget Estimate at Jan-end

Finance Minister Nirmala Sitharaman had raised the fiscal deficit target to 3.8 per cent of the GDP, from 3.3 per cent pegged earlier for 2019-20 due to revenue shortage.

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The government had targeted to restrict the fiscal deficit (RE) at Rs 7,66,846 crore for the year ending March 31, 2020.

The fiscal deficit touched 128.5 per cent of the whole-year Budget target during the April-January period. The deficit in the year-ago period was 121.5 per cent of the corresponding target. The government had targeted to restrict the fiscal deficit (RE) at Rs 7,66,846 crore for the year ending March 31, 2020.

Finance Minister Nirmala Sitharaman had raised the fiscal deficit target to 3.8 per cent of the GDP, from 3.3 per cent pegged earlier for 2019-20 due to revenue shortage.

Total expenditure in the April-January period stood at Rs 22.68 lakh crore, or 84.1 per cent of the Revised Estimate (RE), the data showed. Capital expenditure in the first 10 months of the fiscal stood at Rs 2.68 lakh crore, 75.5 per cent of the full-year estimate (RE) of Rs 3.48 lakh crore.

The Centre’s decision to cap Q4 spending at 25 per cent of the Budget Estimate for the full financial year, compared with the norm of 33 per cent, itself could result in an annual spending compression of nearly Rs 2.2 lakh crore, versus Revised Estimate of Rs 26.98 crore. So there could be curbs on spending in February-March.

If the trend in tax receipts in recent years are any indication, the shortfall in net tax receipts (post transfers to states) could still be about Rs 36,000 crore from the revised estimate (RE), which itself was lower than the Budget estimate (BE) by over Rs 1.4 lakh crore. Of course, if the direct tax dispute resolution scheme, ‘Vivad Se Vishwas’, yields a tidy sum and a good part of it is accounted for in FY20, then the shortfall would reduce.