April-Sept fiscal deficit touches 76% of Budget estimate

Experts say slippage in the fiscal deficit target likely

The government’s fiscal deficit for the April-September period alone has exceeded three quarters of the Budget estimate (BE) for the entire financial year.

According to data released by the Controller General of Accounts on Thursday, at Rs 4.12 lakh crore, the fiscal deficit for the first six months of 2013-14 was 76 per cent of the BE of Rs 5.43 lakh crore. For the corresponding period last year, the deficit stood at 65.6 per cent of the BE.

Arvind Mayaram, secretary in the Department of Economic Affairs, however, maintained, “We will meet the fiscal deficit target (4.8 per cent of gross domestic product, or GDP) for the current financial year.”

As of September-end, the Centre’s Plan expenditure had already ballooned to 42.5 per cent of the budgeted Rs 5.55 lakh crore, against 38.9 per cent in the year-ago period. At Rs 11.11 lakh crore, 51.6 per cent of the estimated non-Plan expenditure of Rs 11.11 lakh crore was incurred by September-end, against 50.7 per cent in the year-ago period.

After Thursday’s data was released, some experts said slippage in the fiscal deficit targets was likely. “The targets could overshoot, but if there is a cut in Plan expenditure, as witnessed last year, it could have a medium- to long-term impact on economic growth,” said Devendra Pant, chief economist, India Ratings.

Last year, the government had drastically cut Plan expenditure to rein in fiscal deficit. However, lower public spending had pulled down growth to an extent, with 2012-13 GDP growth falling to five per cent, the lowest in a decade.

For the quarter ended June, GDP growth stood at a four-year low of 4.4 per cent.

Pant said if the quarter ending December saw a revival in growth, the fiscal side would be supported by additions to revenue receipts.

Owing to fears of pressure on the Centre’s fiscal deficit due to a higher subsidy burden, the finance ministry sought to cut non-Plan expenditure 10 per cent through an austerity drive. For the April-September period, total expenditure stood at Rs 8.09 lakh crore, 48.6 per cent of the BE of Rs  16.65 lakh crore. During the same period, the Centre’s tax collections stood at 34.8 per cent of the BE of Rs 8.84 lakh crore.

On the non-tax revenues front, the Centre was able to collect 47.8 per cent of the BE of Rs 1.72 lakh crore, as of September-end. During the year-ago period, it had collected 34.7 per cent of the BE.

In the April-September period, only 10.6 per cent of the non-debt capital receipts BE of Rs 66,468 crore was realised.

In its second quarter monetary policy review on Tuesday, the Reserve Bank of India had indicated there could be moderate slippages in fiscal deficit targets. It had estimated fiscal deficit for this financial year at five per cent of GDP.

“Containing fiscal deficit in 2013-14 within the budgetary limit could be a challenge, given the level of gross fiscal deficit so far this financial year,” RBI had said.