The deficit in the first quarter amounted to Rs 2.98 lakh crore, or 2.3% of GDP. The Budget target for the fiscal deficit for the full year is Rs 5.31 lakh crore, or 4.1% of GDP. Last year, the deficit in the first quarter was comparatively lower at 48.4% of Budget target.
The NDA government had retained the UPA government's interim Budget projection of cutting the fiscal deficit from 4.5% to 4.1% in 2014-15, hoping to garner higher disinvestment and other non-tax receipts and regulating subsidies.
Analysts were cautious to interpret the widening deficit in the early part of the fiscal year.
At an absolute level, the fiscal deficit in Q1FY15 was 13% higher than the level in Q1FY14, partly on account of unfavourable tax growth, which is a cause for some concern. Moreover, a sharp pickup in outgo for interest payments boosted non-plan revenue expenditure in the just-concluded quarter, said Aditi Nayar, a senior economist at Icra.
Although the fiscal deficit in the first quarter of the current fiscal exceeded half the Budget estimate, fiscal trends for the early part of the year should be interpreted with caution. While inflow from various revenue streams tends to be lower in the first quarter, particularly disinvestment, tax collections and dividends, expenditure is spread out more evenly throughout the fiscal, such as employee expenses, she added.
In the April-June quarter, the government's total expenditure stood at Rs 4.14 lakh crore or 23% of the Budget estimates for 2014-15, which was comparatively same as Q1 of last year.
However, non-plan spending was at Rs 3.02 lakh crore or 24.7% of BE compared with 24.1% in the same period last year while plan expenditure were at Rs 1.12 lakh crore or 19.4% of BE compared with 20.7% in Q1 last year.
The main worry is the slow growth of revenue receipt at Rs 1.14 lakh crore or 9.6% of BE compared with 11.1% in first quarter of last year. Tax collections were at Rs 99,087 crore or 10.1% of BE compared with 11.5% in Q1 last year.
This resulted in widening of the revenue deficit to Rs 2.49 lakh crore or 65.9% of BE during the first quarter as against 55.4% during the same period last year.