Relatively less of fiscal strain so far

In financial year's first 6 months, gap between spending and revenue much less than last year till date; indirect tax collection has surged

The Centre’s fiscal deficit position improved in the first half of  the current financial year against that in the corresponding period of 2014-15, even as it raised capital expenditure by almost 30 per cent to spur economic growth.

The gap between expenditure and revenue was 68.1 per cent of the budget estimate in the six months till September at Rs 3.78 lakh crore, much lower than the 82.6 per cent in the corresponding period of last year, show figures issued on Friday by the Controller General of  Accounts.

September's fiscal deficit was the lowest in any month this financial year, excluding the surplus in the previous month.

The government’s capital spending accounted for 62.1 per cent of what has been estimated in the year's budget. At Rs 1.28 lakh crore in the first half, it was a rise of 29.3 per cent of the Rs 99,104 crore incurred in April-September 2014. September saw the highest such spending this financial year, at Rs 30,206 crore.

The government is targeting gross domestic product (GDP) growth between 7.5 and eight per cent in 2015-16. It was seven per cent in the April-June quarter, the first of the year

August saw a fiscal surplus as the government's capital expenditure was the lowest so far in FY16, at Rs 981 crore. Plan expenditure as a whole reached 54.6 per cent of the budget target by September, as against 42.8 per cent in the corresponding period of the previous year.

On revenue, the government gained substantially in September on account of  a healthy growth in advance tax collection from the corporate sector and high indirect tax collection due to additional revenue measures. The indirect tax collection rose 35.8 per cent in the first half, on account of excise increases on diesel and petrol, withdrawal of exemptions for motor vehicles, capital goods and consumer durables, and an increase in service tax from 12.36 to 14 per cent.

The government beat its own fiscal deficit target last year by containing it at 3.99 per cent of GDP, to Rs  5.01 lakh crore, against the target of 4.1 per cent. According to the fiscal consolidation schedule outlined in Budget 2015-16, the deficit is to be brought down to 3.9 per cent of GDP this year, to 3.5 per cent in 2016-17 and to three per cent by 2017-18.

Non-debt capital receipts at Rs 18,613 crore up to September were only 23.2 per cent of what was budgeted for the year.

The finance ministry is expecting a shortfall in total tax collection on account of lower than estimated revenue from direct taxes. The Centre is readying for a five to seven per cent shortfall in tax revenue collection, Rs 50,000 crore below the budgeted Rs 14.5 lakh crore.

It has also heavily scaled down the year's disinvestment target, by Rs 39,000 crore, due to volatility in the stock market. Finance minister Arun Jaitley said the 3.9 per cent of GDP fiscal deficit target would still be met. “I don't think there are any concerns...I had consciously kept a very modest fiscal deficit target, that is the movement from 4.1 per cent,” he said.

Minister of state for finance Jayant Sinha said the disinvestment process was challenging because of a global commodity slowdown, with many of the identified units from this space.

In the first seven months of the financial year, the government has been able to sell stake only in four companies — Power Finance Corporation, Rural Electrification Corporation, Dredging Corporation of India and Indian Oil Corporation, to net Rs 12,600 crore. It had budgeted for Rs 69,500 crore in the year and has cabinet approval for a stake sale in 20 public sector units — including Oil India, National Aluminium, NMDC, NTPC, Oil and Natural Gas Corporation and Bharat Heavy Electricals — but has put these on hold. It also plans a 10 per cent stake sale in Coal India.

In 2014-15, the government raised around  Rs 25,000 crore from divestment, against the year's target of Rs 58,425 crore.