India’s fiscal deficit has widened in the first half of the current fiscal year. The fiscal deficit stood at Rs 6.52 lakh crore till September-end 2019, compared to Rs 5.95 lakh crore in the same period of the previous fiscal year. The half year’s fiscal deficit is equivalent to 92.6 per cent of the government’s budget estimate for the complete year, which was 95.3 per cent in HY 19. Low revenue collections have become a reason to worry about the fiscal deficit. The revenue deficit stood at Rs 4.85 lakh crore, which is 99.8 per cent of the annual budget estimates.
The Goods and Services Tax collections in September dropped sharply to a 19-month low of Rs 91,916 crore, driven by a slowdown in the economy due to shrinking consumer demand. The pace of direct tax collections has also slowed down.
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The government has pegged the fiscal deficit for the current financial year at Rs 7.03 lakh crore and has aimed at restricting the deficit at 3.3 per cent of the gross domestic product. However, Finance Minister Nirmala Sitharaman has announced a slew of measures that will come at a cost. The government is ready to let go of its revenue of around Rs 1.45 lakh crore by announcing cuts in corporate tax, aimed at boosting the slowing economy.
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Even the Economic Affairs Secretary Atanu Chakraborty had said earlier that the government maintains the fiscal glide path with the borrowing target of Rs 2.68 lakh crore for the second half of the current fiscal year. Meanwhile, the government is optimistic to end the year with the fiscal deficit under the budget estimates.
