The Centre’s capital expenditure in Q1FY22 stood at Rs 1.11 lakh crore or 20.1% of the target as against 21.4% of the relevant target achieved in the year ago quarter.
Thanks to a rise in tax revenue upon a low base, a surge in non-tax receipts attributable to the higher-than-expected surplus transfers from the RBI and economical spending, the Union government managed to contain its fiscal deficit in April-June quarter at 18.2% of the budget estimate (BE) for 2021-22. This is the lowest level the deficit remained in relation to the respective annual BE in the first quarter of a year in over a decade. The fiscal deficit was 83.2% of the corresponding annual target in Q1FY21 while it was 10.5% in Q1FY11.
Recently, finance secretary TV Somanathan told FE that even with the relief package announced recently, the fiscal cost of which is estimated at around Rs 1.5 lakh crore, the fiscal deficit target of 6.8% of GDP for 2021-22 would be adhered to, given the possibility of revenue receipts exceeding the budget estimate and expenditure rationalisation being undertaken (most departments were asked to contain spending in Q2 at 20% of BE against norm of 25%).
The data released by the Controller General of Accounts on Friday put the Centre’s fiscal deficit for Q1FY22 at Rs 2.74 lakh crore as against the BE for 2021-22 of Rs 15.07 lakh crore.
The Centre’s non-tax receipts surged over eight times to Rs 1.27 lakh crore in Q1FY22 thanks to the Reserve Bank of India’ surplus transfer of Rs 99,122 crore (for the last nine months of FY21), which was almost double the level government budgeted for. Non-tax receipts in Q1FY22 were 52.4% of the FY22BE compared with just 3.9% of the corresponding target achieved in the year ago quarter.
The Centre’s net tax receipts more than tripled to Rs 4.13 lakh crore or 26.7% of FY22BE compared with a mere 8.2% of the corresponding target reported in the pandemic-hit quarter a year ago.
On the tax front, almost all heads under direct and indirect taxes performed well with a near doubling of net receipts (before devolution, post-refunds) in Q1FY22 over the corresponding quarter in FY21. Excise duty collections from petrol and diesel alone fetched over Rs 94,181 crore in Q1FY22, most if this is reflected in net tax receipts as they were collected largely in the form of cesses, which are not shareable with states.
The Centre’s capital expenditure in Q1FY22 stood at Rs 1.11 lakh crore or 20.1% of the target as against 21.4% of the relevant target achieved in the year ago quarter. Total expenditure in April-June of FY22 stood at Rs 8.22 lakh crore or 23.6% of the full year target compared with 26.8% of the target, achieved in the year ago quarter.
“Twenty one ministries/ departments such as: consumer affairs; electronics and information technology; environment, forest and climate change; economic affairs; financial services; indirect tax; fisheries; heavy industries; cabinet (demand for grants under ministry of home affairs); Ladakh (demand for grants under ministry of home affairs); labour and employment; minority affairs; new and renewable energy; parliamentary affairs; ports, shipping and waterways; land resources; biotechnology; skill development and entrepreneurship; social justice and empowerment; empowerment of persons with disabilities and tourism have spent only up to 10% of their FY22 budget (in Q1),” said Sunil Kumar Sinha, Principal Economist, India Ratings.