India?s fiscal deficit in the April-May period of the financial year 2011-12 was 30% higher than what it was in the same period a year ago as there was less buoyancy in tax revenue in the initial month of the fiscal, besides higher corporate tax refunds and an increase in government expenditure to clear its share of loans to the states.
Fiscal deficit in the April-May was recorded at R1,30,726 crore or 31.7% of the level originally estimated at the beginning of the fiscal for the whole year, the Controller General of Accounts said in the data released on Thursday.
Presenting the Budget proposals in February, finance minister Pranab Mukherjee had lowered the fiscal deficit target to R4,12,817 crore or 4.6% of the gross domestic product, from 4.7% achieved during 2010-11.
However, doubts are now being raised about the high growth momentum of the economy in curent fiscal owing to prevailing high inflation.
The pressure on government financial health in the initial months of the financial year has a lot to do with sluggish growth in tax revenue which saw a fall in net corporate tax collections that reached the negative teritory (negative (-) R3,086 crore) against buoyancy in corporate tax colections in same period last year when the government could muster R10,386 crore. The drop in net mop-up during first two months was due to high refunds of around R25,000 crore disbursed by the income tax department in the first two months.
Revenue deficit at R1,10,069 crore in the April-May month was also 35.5% higher at R81,220 crore reached in the same period of previous fiscal.
For fiscal 2011-12, Mukherjee has estimated a 3.4% revenue deficit. The government intends to bring fiscal deficit to 3.5% in 2013-14.
