The Centre has contained its fiscal deficit for FY18 at 3.42% of gross domestic product (GDP), down from 3.5% estimated (RE) when Budget FY19 was presented on February 1. An Rs 85,000-crore (3.8%) reduction in expenditure from the RE level of rs 22.18 lakh crore and a marginal upward revision in nominal GDP in the second advance estimate (the Budget relied on the first advance estimate) allowed the government to curb the deficit, according to sources. The bulk of the spending cut came on the revenue front (about Rs 79,000 crore), while capex too saw a marginal reduction (some Rs 6,000 crore).
The original (Budget estimate) of FY18 fiscal deficit was 3.2%. Net tax revenue stood at Rs 12.52 lakh crore or 98.6% of the revised estimate of Rs 12.69 lakh crore. However, non-tax revenue including non-debt capital receipts did not fare well. Total non-tax receipts were about Rs 3.08 lakh crore or 87% of the RE of Rs 3.53 lakh crore.
In absolute terms, the FY18 fiscal deficit of the Centre was around Rs 5.73 lakh crore or 96.4% of the revised estimate of Rs 5.95 lakh crore. In its second advance estimate, the Central Statistics Organisation had revised nominal GDP from Rs 166,27,585 crore (9.5% growth) to Rs 167,51,688 crore (9.8%).
The full-year provisional GDP data for FY18 is set to be released on May 31. The Centre’s total expenditure was around Rs 21.33 lakh crore in FY18. The Centre’s revenue expenditure was Rs 18.66 lakh crore and capex was Rs 2.67 lakh crore.
The latest Budget gave a miss to the fiscal deficit target and settled for a revised medium-term consolidation process. While the deficit, according to an earlier plan, was to come down to 3% in FY19, the target for the current year is 3.3% and deficit level is to reach 3% only in FY20.
The Centre has accepted the recommendation of the NK Singh committee on fiscal discipline to bring down its debt-to-GDP ratio to 40% by 2024-25.