Fiscal deficit stands at 87% of Budget estimate in April- Nov 2015

India’ s fiscal deficit for the first eight months of the current financial year narrowed compared to the same period a year ago, led by encouraging tax and non-tax collections, despite high capital spending by the government to boost the economic growth. According to the data released by the Controller General of Accounts, India’ s fiscal deficit for April- November 2015-16 stood Rs 4.83 lakh crore, or 87 per cent of the Budget Estimate (BE) for the whole 2015-16. The fiscal situation in April-November showed improvement over the year-ago period as the deficit then stood at 98.9% of the Budget Estimate of 2014-15.

As per the data released, tax revenue during April- November period came in at Rs 4.64 lakh crore, or 50.5 per cent of the full year BE of Rs 9.19 lakh crore as against 42.3 per cent the same period last fiscal Total receipts from revenue and non-debt capital of the government during the first eight months read Rs 6.5 lakh crore. The government estimates Rs 12.21 lakh crore receipts at end-March 2016.

The data further highlighted that the total expenditure touched Rs 11.4 lakh crore or 64.3 per cent at the end of November of budget estimate for the current fiscal, partially higher than 59.8 per cent of the full year funds spent last fiscal. The plan expenditure during this period was Rs 2.9 lakh core, 64.1 per cent of the full-year BE. During the same period last year, the government had managed to achieve 51.1 per cent of Plan expenditure estimate. Meanwhile, non-Plan expenditure during April-October of 2015-16 was Rs 8.4 lakh crore, or 64.3 per cent, of the whole-year estimate.

Total receipts stood at Rs 6.58 lakh crore or 53.9 per cent of the Budget estimate between April and November this fiscal as against 43.4 per cent of the full year target a year ago. Centre's indirect tax mop up rose 34.3 per cent in the first eight months of 2015-16, led by additional revenue measures such as excise increases on diesel and petrol, withdrawal of exemptions for motor vehicles, capital goods and consumer durables the increase in service tax from 12.36 to 14 per cent. Besides, the government introduced the Swachh Bharat cess of 0.5 per cent with effect from November 15.

Meanwhile, the revenue deficit considered a bigger worry as it does not result in capital formation during the first eight months period of the current fiscal stood at Rs 3.45 lakh crore, or 87.5 per cent of BE compared to 108.6 per cent in the corresponding period of the previous financial year. The fiscal deficit -- gap between government’s expenditure and revenue for 2015-16 has been pegged at Rs 5.55 lakh crore or 3.9 per cent of the gross domestic product (GDP).

The chief economic adviser in the mid-year analysis recommended the government to revisit the fiscal consolidation road map on account of sharp fall in the nominal GDP growth, besides higher estimated expenditure next financial year on account of the 7th Pay Commission and the One Rank One Pension scheme.