In a severe blow to the government’s commitment to limit the fiscal deficit at 4.8 per cent of GDP, the Centre’s fiscal deficit during the April-December period of the current financial year touched Rs 5.16 trillion, against the budgeted target of Rs 5.42 trillion till March 31 this year.
The deficit touched 95.2 per cent of the full-year target in the nine-month period from 78.8 per cent in the year-ago period, as revenue collections failed to keep pace with expenditure, data released by the controller general of accounts (CGA) showed.
This is sure to exert pressure on the government to look for ways to further cut spending. The strain will be felt more after the additional burden of Rs 50 billion disbursed towards the LPG subsidy, following the government recently raising the quota from 9 to 12 cylinders per household.
The government is committed to limiting the fiscal deficit to 4.8 per cent of GDP in the current financial year, compared with 4.9 per cent last financial year.
Although Union Finance Minister P Chidambaram has reiterated many times that the government will not cross the “red line”, the numbers so far suggest that the government may have to look at ways to further curb both plan and non-plan spending as tax revenues are unlikely to pick up in the face of a slowdown in economic growth.
Total receipts grew by 10.4 per cent in the first nine months of the year at Rs 6.47 trillion. The Budget has pegged a 22 per cent rise in total receipts over the previous year at Rs 11.22 trillion.
Non-tax revenues jumped by 34.6 per cent during the April-December period to Rs 1.16 trillion, while tax revenue was up 6.9 per cent at Rs 5.17 trillion.
The non-tax revenues were up mainly due to Reserve Bank of India’s cash transfer to the government.
The RBI had transferred surplus profit to the government amounting to Rs 330.10 billion for the year ended June 30, 2013 compared with Rs 160.10 billion last year.
On the other hand, the current bout of economic slowdown has been eating into tax collections, especially indirect tax receipts leading to tepid tax inflows.
Total expenditure during April-December 2013 were up 17.4 per cent at Rs 11.63 trillion with plan and non-plan expenditures growing at 18.7 per cent and 16.9 per cent, respectively.
