Centre's April-January fiscal deficit touches 58.9% of full-year target

Revenue expenditure was Rs 23.68 trillion, or 74.7% of RE compared with 71.6%

The Centre’s fiscal deficit for April-January FY22 came in at Rs 9.38 trillion, or 58.9 per cent of full-year Revised Estimates, compared with 66.8 per cent for the same period last year, on the back of higher tax proceeds, official data showed on Monday.

In her Union Budget 2023, Finance Minister Nirmala Sitharaman had revised the fiscal deficit target to 6.9 per cent of nominal GDP from Budget Estimate (BE) of 6.8 per cent. However, if the Centre gets higher than expected proceeds from the LIC initial public offering (IPO), then the BE target can be met. For FY23, the fiscal deficit BE is Rs 16.6 trillion, of 6.4 per cent of GDP.

For the April-January FY22 period, the net tax revenue stood at Rs 15.47 trillion, or 87.7 per cent of FY22 RE, compared with 82 per cent for the same period last year. Non-tax revenue came in at Rs 2.91 trillion or 92.9 per cent of FY22 RE compared with 67 per cent in FY21. Non-debt capital receipts came in at 32.6 per cent versus 96.8 per cent, a reflection of the disappointing results of the Centre’s planned privatisation drive in FY22.

Total expenditure for the April-January period came in at Rs 28.09 trillion, or 74.5 per cent of FY22 RE, compared with 73 per cent for the same period last year. Revenue expenditure was Rs 23.68 trillion, or 74.7 per cent of RE compared with 71.6 percent.

Capital expenditure was Rs 4.41 trillion, or 73.4 per cent of FY22 RE, compared with 82.6 per cent for the same period last year. This means that the Centre has to spend Rs 1.6 trillion in the past two months of the current fiscal year.

“The government’s revenue spending grew by a sharp 30 per cent in the month of January 2022, whereas capital spending was contained at Rs 0.5 trillion, 6 per cent lower than January 2021. With Rs 1.6 trillion left to be spent in February-March 2022, it appears unlikely that the capex target of Rs 6 trillion included in the FY2022 RE will be met,” said Aditi Nayar, Chief Economist, ICRA, adding that the revenue expenditure RE for the year will be met.

“The settlement of IGST, dip in gold imports, and cut in excise duty on fuels manifested in a mild contraction in gross tax revenues in January, despite the laudable growth in direct taxes. The gross tax revenues can contract by as much as 18 per cent in February-March 2022, and still meet the FY22 RE, which we expect to be comfortably overshot despite the third wave,” Nayar said.