The Centre achieved the fiscal deficit target of 3.9% of GDP in FY16, the Controller General of Accounts reported on Tuesday, validating the government’s claim earlier.
The Centre’s fiscal deficit stood at Rs 5.32 lakh crore or 3.9% of GDP in FY16, marginally lower than the revised estimate (RE) of Rs 5.35 lakh crore.
Faced with a low nominal GDP growth and shortfall in disinvestment revenue, the government had taken a number of measures, including a series of hikes in excise duty on petrol and diesel, to boost revenue.
After transfers to states, the tax revenue stood at Rs 9.44 lakh crore or 99.7% of the RE in FY16. Total revenue stood at 12.4 lakh crore, or 99.2% of the RE of Rs 12.5 lakh crore. The total expenditure in the last fiscal year was 17.73 lakh crore or 99.3% of the RE, according to the CGA data.
Unlike the previous few years, when the Plan expenditure needed to be cut from budget estimate (BE) level to meet deficit targets, the spending was actually Rs 5,800 crore more than the budget estimate of Rs 4.65 lakh crore. Under the Plan spending, the capital spending — seen critical to kick-start economy — got a huge boost.
Plan capital spending rose by 50% to Rs 1.43 lakh crore in FY16 from Rs 96,135 crore in the previous fiscal. The sharp increase in Plan capital spending has helped the economy grow 7.6% in the last fiscal year from 7.2% in the previous year.
However, the GDP data released separately by the Central Statistics Office said despite the augmented government spending, gross fixed capital formation contracted 1.9% in the January-March quarter as private investments remained tepid.
Meanwhile, the CGA data showed that the Centre’s fiscal deficit for the first month of FY17 was about Rs 1.37 lakh crore or 25.7% of the full year target of Rs 5.34 lakh crore, a situation slightly worse than in the year-ago period.