The Centre’s fiscal deficit, in absolute terms, may come in close to Rs 17 trillion in the current financial year, lower than Rs 17.3 trillion pegged in the revised estimate (RE), on account of a sharp rise in total receipts of the Centre, say economists.
This would mean, the Centre’s fiscal deficit as a percentage of GDP would be similar to that pegged in the RE, that’s 5.8%. Presently, according to the second advance estimate (SAE) of GDP released by the statistics ministry last month, the Centre’s fiscal deficit may come in at 5.9% of the GDP in FY24.
But a Rs 17 trillion fiscal deficit assumption would pull down the fiscal deficit-to-GDP ratio by 10 basis points. The National Statistical Office (NSO) has estimated the country’s nominal GDP to come in at Rs 293.9 trillion in FY24, lower than Rs 296.6 trillion pegged in the interim Budget.
The Centre for Monitoring Indian Economy (CMIE) expects revenue receipts to “pull up” the overall receipts of the government, thus aiding in a fall in the fiscal deficit.
“Overall receipts of the government are expected to close at Rs.28.7 trillion – Rs.1.1 trillion higher than the RE of Rs.27.6 trillion. We expect revenue receipts to amount to Rs.28.2 trillion, compared to Rs. 27 trillion (projected) in the RE,” a CMIE article authored by Sameeksha Kumar said.
Within revenue, both tax and non-tax receipts are likely to overshoot the RE. According to Kumar, tax revenues, net to Centre, are expected to come in at Rs 24.1 trillion, over Rs 80,000 more than pegged in the RE, and non-tax revenue is expected to rise to Rs 4.1 trillion from Rs 3.8 trillion, as per CMIE.
Economists attribute the overshoot in the non-tax revenues to higher dividends from public sector undertakings (PSUs) so far this fiscal.
IDFC FIRST Bank Economist Gaura Sen Gupta expects fiscal deficit to come in at Rs 16.9 trillion in FY24. “The more-than-expected non-tax receipts, leading to decline in fiscal deficit, are anticipated due to higher dividends from PSUs which have already exceeded RE by about Rs 10,000 crore to Rs 60,000 crore,” she said.
Anitha Rangan, economist, Equirius Securities, however, expects the fiscal deficit to be in line with the RE, as the target is “realistic”. “On the revenue side for FY24, there could be some upside in corporate taxes given that the last two months witness 29% of collections, and till now 82% of RE has been achieved,” Rangan said. “However, on the divestment side the Centre could see a shortfall.”
The RE has pegged Centre’s other receipts – which includes divestment and asset monetization – at Rs 30,000 crore. The Centre has so far achieved Rs 14,700 crore revenue from divestments, which is still Rs 6000 crore short of their target from disinvestments this year, sources told FE.
CMIE expects total expenditure to be slightly higher at Rs 45.7 trillion in FY24 as compared to Rs 44.9 trillion pegged in the RE. This is due to rise in revenue expenditure, pertaining to higher outgo towards the Mahatma Gandhi Rural Employment Guarantee Act (MGNREGA).
Garima Kapoor, economist, Elara Securities, expects the fiscal deficit to come in at Rs 16.7 trillion, equivalent to 5.7% of the GDP.