Fiscal deficit at end-Feb exceeds revised estimate

March, final month of FY16, likely to make up as revenue swells

The central government’s fiscal deficit for the first 11 months of FY16 has surpassed the Revised Estimates (RE) of the 2015-16 Union Budget by seven per cent, showed official data issued on Thursday.

This was after the target was reduced, so that as a proportion of gross domestic product (GDP), it came to the same 3.9 per cent as pegged in the original Budget Estimates (BE) due to falling nominal GDP growth rates. Against a 11 per cent earlier growth estimate, nominal GDP is officially pegged to grow 8.6 per cent.

By this time, the deficit had surpassed the RE by a little over 17 per cent a year before. The deficit touched Rs 5.7 lakh crore by the end of February 2015-16, constituting 107.1 per cent of the RE at Rs 5.3 lakh crore. This means the government must have ensured a fiscal surplus of Rs 40,000 crore in March to meet the financial year’s target. The government met the target in 2014-15 despite the deficit overshooting the RE by 17-plus per cent by February.

However, the government might have had to squeeze expenditure, too. It has to be seen whether capital expenditure (capex) or revenue expenditure became a victim of this pressing need. The government’s capex rose 36.2 per cent to Rs 2.2 lakh crore till February, against Rs 1.6 lakh crore in the corresponding period of 2014-15. However, revenue expenditure was up only 3.5 per cent at Rs 13.4 lakh crore till February of 2015-16, compared to Rs 12.9 lakh crore a year before.

Total receipts at Rs 9.8 lakh crore accounted for 78.6 per cent of the RE at Rs 12.5 lakh crore. This was closer to that in the corresponding period of last year, when these had constituted 87.2 per cent of RE. This was despite the government's tax kitty swelling to Rs 7.3 lakh crore till February, 77.7 per cent of the RE at  Rs 9.5 lakh crore. At this time a year before, taxes were 71.7 per cent of RE. As the government almost halved the target of non-debt capital receipts, mostly divestment proceeds, to Rs 44,217 crore in the RE against Rs 80,253 crore pegged in the BE, the realisation at Rs 35,951 crore till February represented 81.3 per cent of the RE. However, this was also lower than the 96.5 per cent of RE realised till February of last year.

Non-tax revenue was Rs 2.1 lakh crore or 81.7 per cent of the RE amount of Rs 2.6 lakh crore. This was higher than the 75.7 per cent of RE during the first 11 months of FY15.