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Fiscal deficit widens to Rs 9.53 lakh crore

The fiscal deficit at the end of September was about 114.8 per cent of the annual budget estimate

Our Special Correspondent   |   New Delhi   |   Published 28.11.20, 02:32 AM

The fiscal deficit widened to Rs 9.53 lakh crore, which is 119.7 per cent of the Rs 7.96-lakh-crore budgeted target, at the end of October of the current financial year.

The deficit widened mainly on account of poor revenue realisation. The lockdown imposed to curb the spreading of coronavirus had significantly impacted business activities and in turn contributed to sluggish revenue realisation, according to official data released on Friday.

The fiscal deficit at the end of September was about 114.8 per cent of the annual budget estimate.

In the first seven months of 2019-20, the deficit was 102.4 per cent of the annual target.

The fiscal defict or gap between the expenditure and revenue had breached the annual target in July this year.

“The fiscal deficit is at Rs 9.53 lakh crore which would be roughly 4.8-5 per cent of GDP if it holds for the full year. We believe the deficit based on the expenditure allocations announced by the FM will double this amount taking the ratio of close to 9-9.25 per cent for the year. Hence, while tax collections can increase in proportion to growth in the next four months, it may not be possible to recoup the losses in the first 7-8 months,” said Madan Sabnavis, chief economist at Care Ratings.

The government received Rs 7,08,300 crore — which is 31.54 per cent of the 2020-21 budget estimate of the total receipts — up to October. It comprised Rs 5,75,697 crore of tax revenue (net to the Centre), Rs 1,16,206 crore of non-tax revenue and Rs 16,397 crore of non-debt capital receipts. Non-debt capital receipts consist of recovery of loans of Rs 10,218 crore and disinvestment proceeds of Rs 6,179 crore. 

Aditi Nayar, principal economist at Icra, said, “The overall fiscal picture for the April-October 2020 period remains grim, although the expansion in gross tax revenues as well as capital spending in the month of October 2020 are encouraging. We expect the fiscal deficit to widen to Rs 14.5 trillion or 7.7 per cent of GDP in 2020-21 from the budgeted level of Rs 8 trillion and Rs 9.4 trillion in 2019-20 (provisional).”

Total receipts in the April-October period of 2019-20 was nearly 45 per cent of the annual target.

In the current financial year, Rs 2,97,174 crore was transferred to state governments as part of devolution of share of taxes by the Union government till the end of October. The amount under devolution was Rs 69,697 crore lower compared to the year-ago period.

Till October of the current fiscal, total expenditure incurred by the Centre was Rs 16,61,454 crore -- which is 54.61 per cent of 2020-21 budget estimate. Out of the total amount, Rs 14,64,099 crore was on revenue account and Rs 1,97,355 crore on capital account, as per the data.

Out of the total revenue expenditure, Rs 3,33,456 crore was from interest payments and Rs 1,85,400 crore on account of major subsidies.

For this financial year, the government had pegged the fiscal deficit at Rs 7.96 lakh crore or 3.5 per cent of the GDP in the budget which was presented by Finance Minister Nirmala Sitharaman in February 2020. These figures, however, may have to be revised significantly in view of the economic disruptions created by the outbreak of the coronavirus.

Fiscal deficit had soared to a seven-year high of 4.6 per cent of the Gross Domestic Product (GDP) in 2019-20, mainly due to poor revenue realisation.

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