India's fiscal deficit for Q1 reaches 25.3% of annual target: Govt data

The central government’s fiscal deficit increased to 25.3 per cent or Rs 4.5 lakh crore for the first quarter of the current financial year 2023-24, according to the data released by the controller general of accounts (CGA).  The fiscal deficit in the corresponding period last year was 21.2 per cent of the budget estimates. 

The higher deficit for April-June 2023 is due to a rise in capital expenditure and accelerated tax devolution to states, which experts said offset the sharp jump in non-tax revenue.  

According to the CGA, the total non-tax revenue for the first three months of this financial year was Rs 1,54,968 crore or 51.4 per cent of the budget estimates against 23.1 per cent for the same period last year. Dividends and profits made up 105 per cent of the non-tax revenue, adding up to Rs 91,000 crore. 

“Higher than budgeted dividend surplus transfer of Rs. 874.2 billion from the RBI is likely to provide some cushion to meet any undershooting in other revenues streams including disinvestment or potential overshooting in expenses, relative to respective BE, such as MGNREGA,” said Aditi Nayar, Chief Economist, Head - Research & Outreach, ICRA Ltd.

That tax revenue for the April-June 2023 period was Rs 4,33,620 or 18.6 per cent of the budget estimates compared to 26.1 per cent in the first quarter last year. 

Fiscal deficit - the difference between government’s expenditure and revenue, stood at 6.4 per cent of the GDP in 2022-23. The government, during the union budget, projected to bring down the fiscal deficit to 5.9 per cent of the gross domestic product (GDP) in 2023-24. 

The central government's total expenditure in the first quarter stood at Rs 10.5 lakh crore or 23.3 per cent of the budget estimates, compared to 24 per cent of the BE in the year-ago period.

The Centre has released over Rs 3.09 lakh crore in tax devolution to states till July,  of the Rs 10.21 lakh crore budgeted to be transferred in the current fiscal. Nayar said that this was 54 per cent higher than April-July FY2023, and about 30 per cent of the FY2024 BE. 

“To meet the latter, the GoI has to release Rs. 7.1 trillion to the states in the next eight months, which is 5 per cent lower than the amount devolved in August-March in FY2023. This would contain the incremental fiscal deficit in some of the ensuing months,” she added. 

CGA data showed that of the total expenditure, Rs 7.72 lakh crore was on the revenue account and Rs 2.78 lakh crore was towards the capital account. Of the total revenue expenditure, Rs 2,43,705 crore was on interest payments and Rs 87,035 crore on major subsidies.