Flat revenues pushed the Centre’s fiscal deficit for the first four months of FY17 to about Rs 3.93 lakh crore, or 73.7% of the full-year target of Rs 5.34 lakh crore. In the same period last year, the deficit was 69.3% of the corresponding annual target.
The quality of the Centre’s fiscal deficit remained subdued in April-July of FY17 as compared with the year-ago period, with a year-on-year decline in its capital spending, which is critical to the revival of economic activity. Capital expenditure — including Plan and non-Plan categories — stood at Rs 71,283 crore, or 29% of the full-year target up to July this year, as against R86,026 crore (36%) in the corresponding period of FY16. But Plan expenditure remained robust, at Rs 1.98 lakh crore, or 36% of the full-year estimate, compared with Rs 1.58 lakh crore (33.9%) in the year-ago period. Top spenders in this category included roads & transport, rural development, urban development, health and agriculture.
The Centre managed to contain non-Plan expenditure, which stood at Rs 4.59 lakh crore in April-July this year, or 32.1% of the full-year target, as compared with Rs 4.43 lakh crore, or 33.8% of the previous year’s target during the period. However, the huge payouts under 7th Pay Commission (to be released with arrears in the August salaries) is likely to push up revenue spending this quarter.