Deficit slippage already here

Post-Budget data shows FY 15 gap by end-Jan had crossed full-year estimate by a wide margin; govt must maintain compensating surplus in Feb & March

After the finance ministry in the Budget estimated the Centre’s fiscal deficit at 4.1 per cent of India's gross domestic product (GDP) for 2014-15, official data issued on Monday showed the deficit had crossed the Budget Estimate (BE) by seven per cent by end-January of the current financial year, despite oil subsidies coming down drastically.

More so if the revised estimate (RE) of the deficit is taken into account. The deficit turned out to be 110.8 per cent of the RE, as the RE of the fiscal deficit was lowered to Rs 5.12 lakh crore against Rs 5.31 lakh crore in the BE. In percentage terms, the fiscal deficit was retained at 4.1 per cent of GDP in both BE and RE.

This means the government will have to maintain a fiscal surplus of Rs 37,000 crore in February and March, the last two months of the financial year.

However, the government says it is confident of meeting the deficit target. For, most of the spectrum and licence fee in telecom is yet to be realised, pegged at Rs 40,847 crore in the RE for 2014-15. And, proceeds from the stake sale in Coal India Ltd, at over Rs 20,000 crore, was not taken into account.

Beside, personal income tax assessees pay much of their taxes in the last two months. Also, companies will pay their final instalment of advance taxes by March 15.

The fiscal deficit touched 98.2 per cent of the BE till end-January in 2013-14. As such, the government was not expected to be in surplus in the last two months of 2013-14 but to keep the fiscal balance.

The official data, issued by the controller general of accounts, showed for the first 10 months of 2014-15, tax revenue was Rs 5.94 lakh crore, about 71 per cent of the full-year BE of Rs 9.77 lakh crore. This is despite the government collecting more from four excise duty rises on petrol and diesel, in November, December and January.

 

Non-tax revenue was Rs 1.58 lakh crore, 74.5 per cent of the full-year target of Rs 2.13 lakh crore, compared to 84.7 per cent for the corresponding period last year. There should not be much problem under this head, as the government expects to mop Rs 40,000 crore from spectrum sale and other revenues in the telecom sector.

Non-debt capital receipts were Rs 17,022 crore, about 13.8 per cent of the full year's target of Rs 74,000 crore. The Coal India sale has not been factored in.

Total revenues were Rs 7.7 lakh crore. This was almost 61 per cent of the full-year BE of Rs 12.64 lakh crore. The government had also realised 65.6 per cent of the BE in 2013-14 at this point of time.

Expenditure has been a bit compressed. It was Rs 13.38 lakh crore or 74.6 per cent of the BE of Rs 17.94 lakh crore. The difference between expenditure and revenues is the fiscal deficit. Expenditure was 76.3 per cent of the BE in the first 10 months of the previous year.

Non-plan spending was Rs 9.68 lakh crore, about 79.4 per cent of the full-year target of Rs 12.2 lakh crore, compared with 81.2 per cent for the first 10 months last year. Softening of global crude oil prices and the resultant impact on subsidies helped cap spending.

Plan spending for April-January was Rs 3.69 lakh crore, about 64.3 per cent of the full-year target of Rs 5.75 lakh crore, compared with 66.5 per cent for April-January last year.