Most departments were asked to contain spending in July-September to 20% of BE against norm of 25%. The expenditure curbs on departments were lifted on September 24.Curbs on revenue expenditure and robust revenues helped the Union government contain its fiscal deficit in April-August to 31.1% of the budget estimate (BE) for 2021-22.
This was the lowest in any comparable period in relation to the respective BE since FY11, when the deficit came in at 39.7% of the BE in the first five months. The fiscal deficit was 109.3% of the corresponding annual target in April-August of FY21.
Even with the relief packages and export subsidy arrears clearances announced recently, the fiscal cost of which is estimated at around Rs 2 lakh crore, the fiscal deficit target of 6.8% of GDP for 2021-22 could be adhered to, given that tax revenue receipts would likely exceed the budget estimate by about Rs 2 lakh crore and expenditure rationalisation undertaken might allow savings of about Rs 1.15 lakh crore.
Most departments were asked to contain spending in July-September to 20% of BE against norm of 25%. The expenditure curbs on departments were lifted on September 24.
Robust revenue receipts gave the Centre confidence to limit its annual market borrowing programme at the budgeted level of Rs 12.05 lakh crore for FY22 even after factoring in Rs 1.59 lakh crore back-to-back borrowing arranged by the Centre for GST compensation to states, effectively bringing down its borrowings by Rs 1.59 lakh crore on-year.
In the first five months, the Centre’s net tax receipts rose 127% on-year to Rs 6.45 lakh crore or 41.7% of FY22BE compared with just 17.4% of the corresponding target reported in the year-ago period. Corporation tax collections (post refunds) rose 160% on-year to Rs 1.68 lakh crore in the first five months of FY22 and up 51% over the corresponding period of pre-pandemic FY20, indicating robust profit growth of India Inc. Personal income tax (PIT) grew 69% on-year to Rs 1.99 lakh crore in April-August of the current financial year and up 20% over the corresponding period of FY20.
There is a lack of clarity on whether the disinvestment target of Rs 1.74 lakh crore will be achieved in the current fiscal, and big-ticket plans like the BPCL sale will be crucial in this context.
Revenue secretary Tarun Bajaj told FE recently that PIT had grown 62% on-year to Rs 2.88 lakh crore till September 23 of the current fiscal.
The Centre’s gross tax revenue grew 70% on-year to Rs 8.6 lakh crore in April-August of FY22 and was up 30% over the corresponding period in FY20.
The Centre’s capital expenditure in April-August of FY22 stood at Rs 1.72 lakh crore or 31% of the annual target as against 32.6% of the relevant target achieved in the year-ago period. After slowing down during the first four months, capex grew by 92% on-year in August.
Total expenditure in the first five months of the financial year stood at Rs 12.77 lakh crore or 36.7% of the full year target, compared with 41% of the target achieved in the year-ago period.
Data released by the Controller General of Accounts on Thursday put the Centre’s fiscal deficit for April-August of FY22 at Rs 4.68 lakh crore as against the BE for FY22 of Rs 15.07 lakh crore.
Commenting on the H2 borrowing plan announced on September 27, Icra chief economist Aditi Nayar said, “The implication is that the government’s fiscal deficit will be around Rs 1.6 trillion lower than budgeted, despite the modest rise in expenditure, a clear confirmation of the revenue upturn that is under way. This also suggests that GoI’s disinvestment programme is assessed to be on track.”
