The government’s fiscal deficit touched 96% of the full-year estimate at the end of October, raising concerns of slippage in the current financial year.
Higher expenditure and lower-than-expected non-tax revenue contributed to the fiscal deficit widening from 79.3% at the end of October last year.
The fiscal deficit stood at Rs 5.25 lakh crore during April-October, according to official data released on Thursday. For 2017-18, the government aims to bring down the fiscal deficit to 3.2% of GDP.
The government’s revenue receipts stood at Rs 7.29 lakh crore in the seven months ended October, or 48.1% of the budget estimate of Rs 15.15 lakh crore for the year, according to the data released by the Controller General of Accounts.
The receipts, comprising taxes and other items, were at 50.7% of the target in the year-ago period. India rolled out the goods and services tax from July 1, replacing multiple state and central taxes, but the new regime is yet to settle down.
Economists expect lower tax revenue to be matched by non-tax revenue. “Inching up of the government of India’s fiscal deficit… highlights the lingering concerns related to the possibility of a fiscal slippage in the current year…
“The risk of a slippage relative to the fiscal deficit target for FY 2018 stems primarily from the growing likelihood that tax and non-tax revenues would undershoot the budgeted level, whereas concerns regarding the magnitude of disinvestment inflows have ebbed,” said Aditi Nayar, principal economist at ICRA.
Economists pointed out that non-tax revenue in the April-October period has contributed to some extent to a higher fiscal deficit.
“April-October fiscal deficit has been impacted by below-par performance of non-tax revenue. It declined by 43.4% from the April-October 2016 figure. This decline is mainly due to low surplus transferred by the RBI,” said Devendra Kumar Pant, chief economist at India Ratings & Research.
Pant said encouraging disinvestment receipts would help the government move closer to the 3.2% fiscal deficit target in FY18.
According to the data, the government’s total expenditure was Rs 12.92 lakh crore at Octoberend, or 60.2 % of the budget estimate. It was 58.2% of the estimate a year ago.Capital expenditure during April-October was 52.6 % of the budget estimate compared with 50.7% a year earlier.
Revenue expenditure, including interest payment, was 61.5 % of the budget estimate compared with 59.2 % a year earlier.