Thanks to higher tax and non-tax receipts, the Centre’s fiscal deficit was contained at Rs 4.11 lakh crore or 74% of the FY16 budget estimate in the first seven months of the fiscal even after giving a boost to Plan Expenditure. In the same period last year, the fiscal deficit stood at 89.6% of the corresponding target.

The deficit estimated in the Budget (BE) for current fiscal year is R5.56 lakh crore or 3.9% of the GDP.

While revenue receipts have been rather strong, the Centre also managed to contain the non-Plan expenditure, mostly of the routine variety and not very productive in nature.

fiscal

After transfers to states, the tax revenue stood at Rs 4.29 lakh crore or 46.6% of the BE compared with 37.7% of the corresponding estimate in the year ago period. Total revenue receipts in April-October stood at Rs 5.9 lakh crore, or 51.7% of the BE of Rs 11.41 lakh crore. For the same period last year, revenue receipts were 40.4% of the BE.

Total expenditure in April-October was Rs 10.22 lakh crore or 57.5% of the BE, according to data compiled by the Controller General of Accounts. Total expenditure in the same period last year was 53.6% of the BE for that year.

Thanks to higher expenditure in many sectors including roads projects, in April-October, Plan expenditure stood at Rs 2.7 lakh crore or 58.2% of the BE, which is a substantial improvement compared to 46.4% of the BE in the year-ago period. Non-Plan spending during the first seven months of FY16 stood at Rs 7.5 lakh crore, or 57.2% of the BE against 57% of the BE of FY15. While the deficit has been contained better than last year so far, the government seems to be clamping down on non-Plan spending to make room for some additional investment commitments to be met in later months, including bank capitalisation. The narrowing of fiscal deficit in the first seven months could remove concerns about achieving the target of 3.9% of GDP in FY16 despite a likely shortfall in tax revenues of Rs 50,000 crore and likely significant underachievement against the disinvestment target of Rs 69,500 crore.