The Centre’s receipts were sufficient to cover only 51% of its expenditure in April-November, leaving a fiscal deficit of Rs 5,25,134 crore, or 98.9% of the full-year projection, the Controller General of Accounts said on Wednesday. The deficit in the first eight months of the previous fiscal was 93.9% of the full-year target. This means that given the diminished revenue buoyancy, the current year will see an expenditure compression sharper than last year’s, if the government sticks to the fiscal deficit target of 4.1% of the GDP.
The government recently said that nominal GDP growth this fiscal would be about 10.6%, instead of 13.4% assumed in the Budget, and estimated a tax revenue over-projection of Rs 1.05 lakh crore. Net tax revenue in April-November stood at Rs 4,13,310 crore, or 42.3% of the budget estimate for the full year, against 44.8% of last year’s target in the same period last year. The decision to roll back the excise cuts for the auto sector and the recent duty hikes for petroleum products are expected to give some impetus to the tax revenue collections in the coming months, along with an effort to crack down on evasion.
With disinvestment faltering (the sole incident was a 5% stake sale at SAIL carried out in December, which garnered Rs 1,700 crore), non-debt capital receipts in April-November was just 10% of the year’s target of Rs 73,952 crore.
So, the axe will necessarily have to fall on capital expenditure — a 21% growth budgeted will be a casualty. This is despite the fact that the Centre’s capital spending, which could be growth-propelling, is less than 2% of the GDP and needs to rise manifold.
Significant parts of revenue expenditure due for this year, especially that on account of fertiliser and food subsidy obligations, may have to be deferred too, causing the Food Corporation of India and fertiliser companies to fret. In the last fiscal, subsidy dues of around Rs 1.1 lakh crore could not be paid by the government (including last quarter demands) were rolled over to the current year.
The fall in global oil prices and the decontrol of diesel have led to moderation in oil subsidy bill. Yet, the oil subsidy to be paid by the government this year could be a trifle higher than Rs 67,000 crore budgeted, given that it had paid arrears of Rs 35,000 crore from the last year.
As per the CGA data, non-Plan expenditure in April-November this year stood at Rs 7,80,532 crore or 64% of the BE, against 65.8% in the corresponding period last year. Plan expenditure in the period under review stood at Rs 2,93,651 crore, or 51.1% of BE, against 52.45 in the same period last year. The Centre’s total expenditure in Apri-November was Rs 10,74,183 crore or 59.8% of the BE, compared with 61.3% of that year’s target in the year-ago period.
Revenue deficit in April-November this year stood at Rs 4,11,075 crore or 108.6% of the full-year target. In the corresponding period of last year, the revenue deficit was recorded at 103.5% of that year’s target. The targetted fiscal deficit of 4.1% of the GDP for the current fiscal is a seven-year low. As per a fiscal consolidation road map currently followed by the Centre, the fiscal deficit has to be brought down to 3% of the GDP in 2016-17. It is possible that the government review the road map and put in place a new medium-term course.