MY KOLKATA EDUGRAPH
ADVERTISEMENT
regular-article-logo Thursday, 05 December 2024

Fiscal deficit likely to exceed target due to spending in employment guarantee scheme, subsidies

In the first supplementary demand for grants, the Centre will spend more on prioritised sectors such as food, fertiliser and LPG subsidies and the Mahatma Gandhi National Rural Employment Guarantee Scheme

Our Special Correspondent New Delhi Published 27.12.23, 11:30 AM
Representational image

Representational image File picture

The fiscal deficit for 2023-24 may cross the target because of higher spends on employment guarantee scheme and subsidies despite the handsome growth in tax collections.

India Ratings and Research, a unit of Fitch Ratings, said the fiscal deficit for 2023-24 will come at 6 per cent of GDP against the budgetary target of 5.9 per cent.

ADVERTISEMENT

"Higher-than-budgeted revenue expenditure triggered through the first and likely second supplementary demand for grants in combination with lower-than-budgeted nominal GDP will push the fiscal deficit," the agency said in a note.

In the first supplementary demand for grants, the Centre will spend more on prioritised sectors such as food, fertiliser and LPG subsidies and the Mahatma Gandhi National Rural Employment Guarantee Scheme.

In fertilisers, the Centre has increased the subsidy to Rs 57,360 crore from Rs 44,000 crore allocated in the budget, exhausting the sum by October itself.

The supplementary demand of grants saw a provision of an additional Rs 14,520 crore under the job guarantee scheme vis-a-vis the budgeted sum of Rs 60,000 crore.

The Centre has already spent Rs 79,700 crore under the scheme by December 19, which is more than the allocation even after the first supplementary demand for grants.

India Ratings said it expects growth in taxes to exceed the target of 11.7 per cent in the budget because of the widening of the tax base, better enforcement of compliance and use of technology in the tax collection process.

The amount collected in the April-October period is nearly 60 per cent of the budget estimate.

However, capital receipts are lagging at Rs 22,990 crore during April-October.

The agency said it believes the government will make a second supplementary demand for grants, as a result the revenue expenditure is expected to increase to Rs 37.1 lakh crore in 2023-24, which is Rs 2 lakh crore higher than the budgeted amount.

Follow us on:
ADVERTISEMENT
ADVERTISEMENT