Fiscal deficit hits 55% of full-year target on the back of higher capex

The Centre’s fiscal deficit for the first two months of fiscal year 2018-19 stood at Rs 3.45 trillion, or 55 per cent of the full year target, on the back of higher capital expenditure. 

However, the pace of spending in relative terms was slower than the same period last fiscal. 

Fiscal deficit for April-May 2017 touched 68.3 per cent of the full year target.

The fiscal deficit target for 2018-19 is Rs 6.24 trillion, or 3.3 per cent of the gross domestic product (GDP).

“Fiscal deficit for April-May 2018 recorded a welcome year-on-year decline on the back of robust growth in indirect tax and non tax revenues as well as near stagnant revenue spending, allowing for a healthy rise in capital expenditure in the early part of the year,” said Aditi Nayar, principal economist at ICRA.

Net tax revenues for April-May 2018 was Rs 1.02 trillion, or 6.9 per cent of the full year target, compared with 5.5 per cent for the first two months of 2017-18. Non-tax revenue was Rs 240 billion, or 9.8 per cent of the full year target against 5.3 per cent for the same period last year. Total receipt was Rs 1.27 trillion, which is 7 per cent of the target compared to 5.4 per cent in the previous year.

Total expenditure till May 31 was Rs 4.73 trillion, or 19.4 per cent of the full year target compared to 21.4 per cent last year. Revenue expenditure was Rs 4.09 trillion, or 19 per cent compared to 21 per cent last year. Capital expenditure was Rs 638 billion, which is 21.3 per cent of the full year target compared with 17 per cent for the same period last year.

As Business Standard reported earlier, the Centre had to pay less amounts in food and fertiliser subsidy carryovers this year compared to last. 

“In contrast to the stagnation in revenue expenditure, capital spending recorded a substantial 21 per cent growth in the first two months of this fiscal, led by sectors such as defence, roads, railways and transfers to states,” Nayar said.