Fiscal deficit for April-Dec today expected to show a better picture

 

The fiscal deficit data for April-December 2015-16, scheduled to be released on Friday evening by the Controller General of Accounts, is expected to present a better picture of the government's finance compared to the corresponding period last year, while still maintaining healthy levels of public spending.

The fiscal deficit for April-November, released last month, came in at Rs 4.83 lakh crore, about 87% of the full-year target of Rs 5.56 lakh crore, compared with 99% for the corresponding period last year, primarily due to higher indirect tax revenue and non-tax revenue, including dividend from the Reserve Bank of India and state-owned companies, and higher capital receipts.

This was even as total capital spending came in at Rs 1.59 crore, about 31% higher compared to April-November last year. Finance Minister Arun Jaitley has committed to higher public spending in infrastructure this year even as the private sector struggles to come on-board because of stretched balance sheets. As reported earlier, this commitment is expected to continue next year as well.

For April-December, similar trends in indirect taxes, non-tax revenue, capital receipts as well as capital spending are expected to show. In fact, in past years, the fiscal deficit for the first three quarters has met or even breached the full-year fiscal deficit target, before clampdown on expenditure takes place in the last three months to bring the deficit back in line.

Nothing similar to that is expected this time and the April-December numbers are expected to well within the comfort levels of the government and policy observers. This also means there will hardly be any spending cuts this year, compared with previous financial years when such expenditure cuts were sometimes higher than Rs 1 lakh crore.