The first quarter fiscal deficit represents a mere 10.5% of the budget estimate of Rs 3,81,408 crore for 2010-11, as compared with the deficit in the year-ago period which accounted for 31% of the years estimate of Rs 4,00,996 crore. The fiscal deficit, which represents excess of government expenditure over its revenue, for the first quarter of the last fiscal stood at Rs 1,24,302 crore. The major fall in fiscal deficit comes from a significant hike in revenue receipt of the Centre, which saw a rise of 178%, to Rs 1,99,810 crore, in the first quarter of this fiscal.
The additional Rs 1,27,815 crore that the government collected this quarter, as compared with the year-ago period, comes mainly from non-tax revenue that stands at Rs 1,15,816 crore.
Windfall gains of over Rs 1.06 lakh crore against the budget target of Rs 35,000 crore from 3G spectrum and BWA auctions towards the end of the quarter also helped narrow the deficit.
Reining in fiscal deficit assumes importance as stimulus measures provided by the government since 2008 had disturbed targets. Against the target of a mere 3% mandated by a central legislation, fiscal deficit more than doubled to over 6% of the GDP during 2008-09. Last fiscal, it rose further to over 6.5%.
With a partial rollback of stimulus, the government expects to bring down the fiscal deficit to 5.5% of the GDP this financial year. Experts believe the Centre can easily prune fiscal deficit to less than 5% of the GDP, given the sum it has received from the spectrum auctions.
The larger-than-expected amount gained from spectrum auction also narrowed revenue deficit during the quarter ended June to Rs 10,577 crore, 3.8% of the fiscal target of Rs 2,76,512 crore. Last fiscal, the first quarter accounted for 38.1% of the yearly estimate.
Revenue deficit is the gap between the governments current expenditure and receipts.