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The Centre's fiscal deficit in the first ten months of the financial year stood at Rs 5,32,842 crore, breaching the Revised Estimate of Rs 5,24,539 crore, showed the Controller General of Accounts (CGA) today. At Rs 5,32,842 crore, the fiscal deficit is 101.6% of the RE, against 89.4% in the corresponding period of the last financial year. Fiscal deficit was retained at 4.9% last year.
If revenue collections don't grow at a much faster pace in the last two months, fiscal deficit as percentage of GDP may overshoot Finance Minister P Chidambaram's RE of 4.6% given in the interim Budget earlier this month. The government is pegging its hopes on the fourth and last installment of advance tax collections to be paid in March.
To rein in the deficit at the projected level, the finance minister may have to compress Plan expenditure further after it was slashed by about Rs 80,000 crore in RE. This may affect growth ahead of general elections in May-April.
Economists, however, said the fiscal deficit was unlikely to exceed the projection of 4.8% of GDP that had been made at the time of the Budget for 2013-14. In Budget for 2013-14 the government had proposed to bring down the fiscal deficit to 4.8% of GDP or Rs 5.42 lakh crore.
"The pick-up in the pace of tax growth in January 2014 is encouraging. However, based on the data for the first 10 months of the fiscal, excise and service tax collections appear likely to miss the revised targets for 2013-14. Net of the states' share in Central taxes, we expect the shortfall in the Central government's tax collections to be around Rs 10,000 crore," said Aditi Nayar, Senior Economist, ICRA.
As per the CGA data, the revenue deficit during April-January 2013-14 was Rs 3,78,850 crore or 102.3% of the RE. Revenue receipts during the period were Rs 7,21,905 crore or 70.1% of the RE. Total expenditure, on the other hand, was only 79.8% of the RE at Rs 5,90,434 crore.
For the next financial year, the deficit is pegged at 4.1% of GDP, one percentage point lower than targeted in a fiscal consolidation road map, even as the government cut excise duties to spur manufacturing, particularly production of consumer durable goods which fell for the 13th month in a row in December.
