As per the government’s expectations, gross tax revenues may exceed the Rs 27.6 lakh crore FY23 budget estimates by at least Rs 3-3.5 lakh crore. A nominal GDP growth projected the budget for FY23 at 11.1 per cent. The actual growth, however, may be much higher due to the high inflation
The Centre is expecting to perform better than the budgeted FY23 fiscal deficit target which is fixed at 6.4 per cent of GDP (gross domestic product). The reasons quoted behind this are buoyant revenues, according to a media report.
Various ministries may lack to utilise their full allocation for the year in order to provide a cushion to the finance ministry for meeting the sharply higher requirement for food, fertiliser and petroleum subsidies. The growth of nominal gross domestic product (GDP), which was recorded higher-than-budgeted, may also help deficit numbers.
As per the government’s expectations, gross tax revenues may exceed the Rs 27.6 lakh crore FY23 budget estimates by at least Rs 3-3.5 lakh crore.
Revenues have been buoyant with both direct taxes and the Goods and Service Tax (GST) recording a strong growth. In order to cool down inflation, the brunt of the tax cuts have softened, the central excise collections.
Also, the windfall tax imposed on domestic crude may not yield much. This can be due to the government losing commensurate revenues on profit petroleum, according to the media report.
Expectedly, the disinvestment too will be less than the Rs 65,000 crore estimated for FY23 and privatisation of public sector banks may not be taken up this financial year. The Single Nodal Account for the management of Central Sector Scheme (CSS) funds, has also reset the release of funds for welfare and development schemes. It was a significant expenditure reform.
On the basis of utilisation, the funds are released directly to the states, which has streamlined the process. Spending, however, has been slow as the new system settled down. States too have substantial unspent amounts.
This may result in many ministries not be able to use FY23 budgets fully, which will enable the finance ministry to meet demands elsewhere without derailing the fiscal deficit. The total expenditure budget accounts for FY23 is Rs 39.4 lakh crore. The government, during the first half, spent Rs 18.2 lakh crore which is 46.2 per cent of the full fiscal estimate. In contrast, the collection made by centre is 52.7 per cent of the budgeted receipts during the first half of the fiscal.
A nominal GDP growth projected the budget for FY23 at 11.1 per cent. The actual growth, however, may be much higher due to the high inflation. The nominal GDP growth reported during the first quarter of the fiscal year was 26.7 per cent.