The Fiscal Deficit – or the gap between the government’s total expenditure and revenue; is a very important macro economic indicator, and suggests how well the government manages to budget itself for the entire year and is a matter of pride for the incumbent government to stick to its budgeted Fiscal Deficit target.
At the beginning of the year, the government set a fiscal deficit target of 3.3% of GDP or ₹ 6,24,000 crore. Then, in the interim budget announced earlier this month, it revised this estimate to 3.4% of GDP or ₹ 6,34,000 crore, on account of additional outlay of ₹ 20,000 crore for funding an income scheme for small farmers.
However, as per latest data released by the Controller General of Accounts (CGA), for the 10 month period ending January, the total revenue or income of the government stood at ₹ 12.31 lakh crore and its total expenditure was ₹ 20.01 lakh crore, this results in a fiscal deficit of ₹ 7,70,000 crore or 121.5% of the yearly target with two months yet to go.
Being an election year, the government tends to concentrate on populist spending and hence may not be able to live up to its budgeted commitments this year. However, a breakup of governmental revenues shows that direct tax revenues grew at a robust pace of 15.7%, but indirect taxes were a cause for worry, with the recent interim budget lowering its GST collection estimates by a whopping ₹ 1 lakh crore to ₹ 5.03 lakh crores. The disinvestment target, which was pegged at ₹ 80,000 crore at the beginning of the year, stood at only ₹ 35,606 crore or 44.5% of the target with two months to go for the financial year end. The recent additional interim dividend of ₹ 28,000 crores announced by the RBI has also added to the kitty of the government, but still the overall picture is worse than expected.