The Centre’s fiscal deficit in April-July soared to 92% of Rs 5.46 lakh crore estimated for the whole of 2017-18, largely due to a steep increase in explicit subsidies. The fiscal deficit in the first four months of 2016-17 was nearly 74% of the annual estimate. In April-July this year, the Centre released about Rs 1.5 lakh crore in food, fertiliser and fuel subsidies, an increase of 42% year-on-year. The front-loading of the subsidies, especially in food and fuel, was aimed at easing the liquidity problems for the intermediaries like Food Corporation of India and fuel retailers. Besides subsidies, the April-July period of this year also saw a 33% year-on-year rise in capex at Rs 95,126 crore, nearly 40% of which was defence-related.
The Centre’s total expenditure in the first four months of this fiscal stood at Rs 8.08 lakh crore, which was 37.7% of the full year target of Rs 21.47 lakh crore, compared with 33.2% of the relevant target of the corresponding period last year. The higher spending was in line with the early passage of the Budget, which gave some departments flexibility to front-load spending depending on requirements. The departments which benefited from the front-loading of expenditure included defence, agriculture, housing and rural development, among others. The Centre’s net tax revenue, after transfer of states’ share, was at Rs 2.58 lakh crore, or 21% of the 2017-18 target; nearly at the same level of the full-year target of last year.
The flat net tax revenue collections with regard to the target could be partly due to non-capturing of July goods and services tax (GST) receipts, which companies were required to pay by August 25. Nonetheless, the Centre’s gross tax revenue grew by 17% to Rs 4.52 lakh crore during April-July of 2017-18. The GST regime, rolled out from July 1, seems to have yielded positive result in its first month. The government has collected Rs 92,283 crore from the GST and attendant cesses till August 29, from 64% of the July taxpayer base, more than meeting the target for the month. It is a comforting factor for the government, which received only half of nearly `60,000 crore dividend estimated from the central bank for this year and indications suggest a shortfall in telecom spectrum-related receipts also.