Apr-Jun fiscal deficit at 61% of FY17 target

The Centre’s fiscal deficit for the April-June quarter (Q1, first three months of this financial year) was Rs 3.26 lakh crore, about 61.1 per cent of the full financial year’s target of Rs 5.34 lakh crore.

For the corresponding period last year, the deficit was 51.6 per cent of the full year’s target. This indicates a greater front-loading of expenditure this time, plus below-par non-tax revenue receipts.

However, that increase in spending seems to have come from revenue expenditure, not capital spending, which was lower as a percentage of the full-year budgeted estimate as compared to last year.

“Both the magnitude and quality of the central government’s fiscal deficit worsened in Q1 as compared to the year-ago period, with a considerable rise in its revenue expenditure and a discomfiting year-on-year (y-o-y) decline in capital spending,” said Aditi Nayar, senior economist at ratings agency ICRA.

For these first three months, total expenditure was Rs 5.12 lakh crore or 25.9 per cent of the full-year target of Rs 19.78 lakh crore, compared with 24.2 per cent for the corresponding period last year.

Non-Plan spending was Rs 3.64 lakh crore, about 25.5 per cent of the full-year Budget Estimate, compared with 24 per cent for the corresponding period last year. Plan expenditure was 1.47 lakh crore or 27 per cent of the full-year estimate, from 24.7 per cent for the comparable period.

Non-Plan capital spending was 22.6 per cent of the full-year target for April-June, compared with 26 per cent for April-June 2015, while Plan capital spending was 18 per cent of the full-year estimate, compared with 23 per cent last year. Net tax revenue was Rs 1.57 lakh crore, about 15 per cent of the full-year target of Rs 10.54 lakh crore, compared with 11 per cent in 2015-16. Non-tax revenue was Rs 23,484 crore, only 7.3 per cent of the full-year target, compared with 18 per cent for April-June last year. Total receipts were Rs 1.85 lakh crore or 12.8 per cent of the 2016-17 Budget Estimate of  Rs 14.45 lakh crore, compared with 11.8 per cent for the comparable period.

“The y-o-y decline in non-tax revenue in the first quarter of this fiscal reflects the impact of the telecom spectrum inflows in April 2015, related to the auctions that had been conducted in the March quarter of FY15,” said ICRA’s Nayar. “The receipts realised from tax revenues, spectrum auction proceeds and disinvestment would crucially affect the fiscal turnout in 2016-17, in the light of the rise in expenditure related to the pay commission’s recommendations.”