Net tax revenue remained almost flat thanks to higher transfers to states
The Centre’s fiscal deficit for April-June of FY16 was about Rs 2.87 lakh crore or 51.6% of the full-year target of Rs 5.56 lakh crore. In the corresponding period last fiscal, the deficit was 56.1% of the full year target.
The government curbed revenue expenditure while keeping the momentum of capital spending, which is seen crucial in the current year to boost economic activity as a pick-up in private-sector investment is, at best, slow.
Revenue receipts during April-June were Rs 1.41 lakh crore, or 12.4% of the full fiscal target of Rs 11.41 lakh crore, thanks to the proceeds of auction of telecom spectrum. For the same period last year, revenue receipts were 9.6% of the full-year target.
However, net tax revenue, despite the government’s claim that collections have been robust, remained almost flat thanks to higher transfers to states. The April-June net tax collection was R1.02 lakh crore, which is 11.1% of the estimate for the full year; in the corresponding period a year ago, the net tax revenue stood at 10.1% of that year’s target.
According to data compiled the Controller General of Accounts, the total expenditure was Rs 4.31 lakh crore in April-June or 24.2% of the Budget estimate (BE) for the full year. Total expenditure in the corresponding period last year was Rs 4.14 lakh crore, or 23% of the BE for the year.
Total spending, which was set at Rs 17.77 lakh crore for FY16, could go up by Rs 25,500 crore after the government sought Parliament’s approval on Friday to spend more on recapitalisation public sector banks, among others.
Minister of state for finance Jayant Sinha said government finances were in a comfortable position on account of higher tax collections and savings from the fall in international crude oil prices. He said the government would meet FY16 deficit target of 3.9% of GDP.