Fiscal Deficit Slows To 21 per cent In April-July FY22

By BW CFO World Online Bureau

Centre’s fiscal deficit pulls down to 21 per cent of the Budgetary Expenditure in April-July FY22 as compared to the previously achieved target

The Centre’s fiscal deficit for the first four months of this fiscal came at only 21.3 per cent of the full-year Budget Estimate being the lowest in 11 years. It was all because of the curbs in expenditure and a rise in tax and no-tax revenue collection. The fiscal deficit was 103.1 per cent of the corresponding annual target in the April-July period of FY21.

Finance Secretary TV Somanathan says that the deficit target of 6.8 per cent of GDP will be met given the possibility of revenue receipts exceeding the budget estimate despite the announcement of relief packages in June. Many of the departments were asked to keep their spending at 20 per cent of the BE rather than the rule for 25 per cent for the July-September quarter.

The data released by Controller General of Accounts on Tuesday put the centre’s fiscal deficit for April-July FY22 at Rs 3.21 lakh crore against the budget estimate for FY 2021-22 of Rs 15.07 lakh crore.

The Centre’s tax receipts increased 4.7 times to Rs 1.39 lakh crore in April-July of FY22. It was all because of RBI’s surplus transfer of Rs 99,122 crore which was almost double what the government budgeted for. Non-tax receipts in the first four months of FY22 was 57.6 per cent of the BE as compared to the 6.7 per cent target.

The centre’s net tax receipts increased 2.6 times to Rs 5.29 lakh crore or 32.3 per cent of BE compared with the 12.4 per cent target. The centre’s capital expenditure in April-July stood at Rs 1.28 lakh crore or23.2 per cent of BE against the 27.1 per cent target achieved last year. Capital expenditure had slowed down during the first four months. It declined 39 per cent to Rs 16,932 crore in July 2021.

Total expenditure in the first four months of the current financial year stood at Rs10.04 lakh crore or 28.8 per cent of BE as compared with the target of 34.7 per cent achieved last year.

This is possible due to growth in FY22 turning positive compared to negative growth in FY21 and higher inflation. Tax collection in FY22 has been benefitted by sharp real GDP growth and inflation tax as reported by India Ratings and Research (IND-RA)’s Chief Economist DK Pant.