India's fiscal deficit at Rs 4.66 trn, 58.6% of annual target in 2 months

Net tax receipts during April-May period were Rs 33,850 cr, while total expenditure was Rs 5.12 trillion

India's federal fiscal deficit in the first two months through May stood at Rs 4.66 trillion ($61.67 billion), or 58.6% of the budgeted target for the current fiscal year, government data showed on Tuesday.

Net tax receipts during April-May period were Rs 33,850 cr ($4.48 billion), while total expenditure was Rs 5.12 trillion, the data showed, indicating the government was front-loading its budgeted spending to combat the impact of pandemic.

India's federal fiscal deficit touched 4.6% of GDP in 2019/20 fiscal year ending March, from initial estimates of 3.3%.

The latest figures for India's fiscal deficit come at a time when the Centre is said to be seriously considering direct monetisation of the fiscal deficit by RBI having sidestepped the idea for the first half (H1) of 2020-21 (FY21). Business Standard has learnt that it is being seriously considered for the second half of FY21.

“It is a high possibility,” said a top government official, when asked if the Centre was considering direct deficit monetisation. “In the latter half of the year, we will have a clearer picture of the economic damage the Covid-19 pandemic has unleashed, and may require further resources to provide support to the economy,” the official added.

The final decision may be taken before the borrowing calendar for October 2020-March 2021 is announced in late September.

Earlier, the Chief Economic Advisor to the Government of India, Krishnamurthy Subramanian had told Business Standard that the Centre’s fiscal deficit in 2020-21, could be 1.7-1.8 percentage points higher than the 3.5 per cent of gross domestic product, which was targeted in the Budget.