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India's fiscal deficit improves to 6.7% in FY22 on higher tax mop up

Fiscal deficit at 6.71% of GDP in FY22 as against revised budget estimate of 6.9%, shows govt data

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Press Trust of India New Delhi
Fiscal deficit for 2021-22 improved to 6.71 per cent of the GDP over the revised budget estimate of 6.9 per cent mainly on account of higher tax realisation.

Unveiling the revenue-expenditure data of the Union government for 2020-21, the Controller General of Accounts (CGA) said that the fiscal deficit in the absolute terms was Rs 15,86,537 crore (provisional). The finance ministry in February had estimated the deficit at Rs 15,91,089 crore or 6.9 per cent of GDP.

According to the data, the tax receipts during the fiscal were at Rs 18.2 trillion as against the revised estimates (RE) of Rs 17.65 trillion. The total expenditure too was higher at Rs 37.94 trillion against the RE of Rs 37.7 trillion presented to Parliament on February 1, 2021. CGA further said the revenue deficit at the end of the fiscal was 4.37 per cent for fiscal 2021-22.

In another set of data, the CGA said the fiscal deficit during the first month of 2022-23 was 4.5 per cent of the Budget Estimate for the current fiscal. The deficit was 5.2 per cent in the year-ago period. The government expects the fiscal deficit for the current financial year at 6.4 per cent of GDP or Rs 16.61 trillion.

In April 2022, there was a revenue surplus of Rs 591 crore. Government meets its fiscal deficit from market borrowings.
Commenting on the data, Vivek Jalan, Partner, Tax Connect Advisory, said the revenue collections were around Rs 27 trillion, almost Rs 5 trillion above the budget estimates of around Rs 22 trillion.

There was a growth of around 35% over the last year's revenue collection, led by growth of around 50 per cent indirect taxes and supported by around 20 per cent growth in indirect taxes, he said.

"The spurt in tax revenues, especially GST Collection was mainly a result of DGARM, which is the Data Analytics wing of the GST Council," Jalan said.

Aditi Nayar, Chief Economist, ICRA said the provisional data indicates that the fiscal deficit of the Centre was contained marginally below the 2021-22 revised estimate, benefitting from the higher tax and non-tax revenue receipts and lower capital spending, which absorbed the deficit in non-debt capital receipts and higher revenue expenditure.

On the outlook for 2022-23, she said there are several risks to the fiscal deficit target of Rs 16.6 trillion for 2022-23, emanating from the revenue loss to the Centre on account of the excise duty cut, lower-than-budgeted transfer of the RBI's surplus, and the need for additional spending on food, fertilizer and LPG subsidies through the year.

For the last financial year, the government had initially pegged the fiscal deficit at 6.8 per cent of the GDP in the budget presented in February 2021.

The government in the revised estimates in the Budget for 2022-23 forecast a higher fiscal deficit of 6.9 per cent of the GDP or Rs 15,91,089 crore for the fiscal ended in March.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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First Published: May 31 2022 | 4:21 PM IST

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