Continued buoyancy in indirect taxes, curbs on expenditure help contain deficit at Rs 4.88 lakh crore
Helped by higher indirect tax revenue and the curbs on non-productive spending, the Centre’s fiscal deficit was contained at Rs 4.88 lakh crore or 88% of the FY16 budget estimate in the first nine months of the fiscal. In the April-December period last year, the fiscal deficit stood at 100.2% of the corresponding target.
The deficit estimated in the Budget (BE) for the current fiscal is R5.56 lakh crore or 3.9% of the GDP.
The government has reiterated that the deficit target would be met despite the likely shortfall in budgeted receipts from direct tax and disinvestment. It continued to give a boost to Plan capital spending, which is in line with the Centre’s strategy to boost economic activity as private investment is perceived to be weak.
Tax revenue receipts have been rather strong. After transfers to states, the tax revenue stood at Rs 6.22 lakh crore or 67.6% of the BE compared with 55.8% of the corresponding estimate in the year ago period. Total revenue including non-debt capital receipts in April-December stood at R8.26 lakh crore, or 67.6% of the BE of Rs 12.22 lakh crore. For the same period last year, revenue receipts were 55.7% of the BE. During the period, gross indirect tax revenue grew by a robust 34.7% against a required rate of 19% while gross direct tax receipt rose 10.6%, lower than the required pace of 16% to meet the budget target.
Total expenditure in April-December was Rs 13.14 lakh crore or 73.9% of the BE, according to data compiled by the Controller General of Accounts. Total expenditure in the same period last year was 68.9% of the BE for that year.
With higher expenditure registered in many sectors including rural development, sanitation and bank capitalisation in April-December, Plan expenditure stood at Rs 3.46 lakh crore or 74.4% of the BE, which is significantly higher than 61.3% of the BE in the year-ago period. Non-Plan spending during the first nine months of FY16 stood at Rs 9.68 lakh crore, or 73.8% of the BE, which was nearly the same ratio of the year ago period.
The fiscal deficit has been contained better than last year so far by keeping monthly spending closer to revenue receipts even after providing additional space for Plan capital spending. During the period, Plan capital spending stood at R1.15 lakh crore, or 85.3% of full year aim, as against 57.9% in the year ago period target.