Centre confident of meeting fiscal deficit target for FY23: Report

On the back of healthy revenues, the Centre expects to meet or even do better than the fiscal deficit target of the current financial year (FY23). According to an Economic Times (ET) report, a higher nominal gross domestic product (GDP) growth and under-utilisation of funds by several ministries will provide the government with the required cushion. The fiscal deficit target for FY 23 has been pegged at 6.4 per cent. 

 

The report added that the Centre expects the gross tax revenue to be "at least" Rs 3-3.5 trillion above the FY23 target of Rs 27.6 trillion.

 

"We are confident that we will meet the fiscal deficit target...It could even be better in percentage terms," an official was quoted as saying by ET.

 

Both direct and indirect tax collections have been robust in FY23. The GST collection was over Rs 1.51 trillion in October. It was the second-highest GST collection ever. The direct tax collection in FY23, till November 10, was Rs 10.54 trillion, 30.69 per cent higher than the same period in FY22. 

 

The central excise collections, however, have been muted due to the tax cuts amid high inflation. The Rs 65,000 crore disinvestment target for FY23 is also unlikely to be met. Fertiliser and food subsidies may put pressure on the expenditure.

 

However, the states reportedly have a substantial amount of unspent money. Several ministries may thus provide room for the finance ministry to meet the higher expenditure needs. In the first half of FY23, the Centre spent 46.2 per cent of its full fiscal expenditure estimate. On the contrary, the revenue has been 52.7 per cent of the FY23 target.