New Delhi: The central government’s fiscal deficit widened to Rs 15.01 lakh crore in April-February period of the current financial year, which is 86.5 per cent of the revised full-year target, according to official data released on Thursday.
In the corresponding period of the previous year the fiscal deficit stood at Rs 14.53 lakh crore or 82.8 per cent of the full year target of Rs 17.55 lakh crore.
The government has set a target to reduce the fiscal deficit in the financial year 2023-24 to 5.8 per cent of gross domestic product (GDP) from 6.4 per cent recorded in the previous year. For the financial year 2024-25 the government has set a target to bring it further down to 5.1 per cent of GDP.
In absolute terms the fiscal deficit, which is the difference between the total expenditure and revenue of the government, is pegged at Rs 17.35 lakh crore, marginally down from Rs 17.55 lakh crore in 2022-23.
As per data released by the Controller General of Accounts (CGA), the government’s total expenditure in the first 11 months of the current financial year stood at Rs 37.47 lakh crore, which is 83.4% of the full-year target.
The government's total receipts stood at Rs 22.45 lakh crore in April-February period, which is 81.5 per cent of the full fiscal target.
Out of the total expenditure in the first 11 months, Rs 29.41 lakh crore was on revenue account, while Rs 8.05 lakh crore was on capital account. Out of the total revenue expenditure Rs 8.80 lakh crore was spent on interest payments, while Rs 3.60 lakh crore was spent on major subsidies.
The current expenditure grew by just 1.3 per cent year-on-year in the first 11 months of the current fiscal. This is the slowest growth on record since the monthly fiscal data was made available in public domain which is April 1997.
On the other hand capital outlay of the centre shot up by a robust 32.8 per cent year-on-year during the period under review.
“The quality of deficit (ratio of revenue to fiscal deficit) is significantly better this fiscal as it stood at 48.7 per cent during 11 months of FY24 (record-low) and suggests that majority of the borrowing have been used for capex,” said Paras Jasrai, senior analyst at India Ratings and Research.
There was a sharp increase in the government capital expenditure (capex) in February, ahead of the announcement of the dates for the Lok Sabha elections. The Government of India’s capex surged to Rs 844 billion in February 2024 from Rs 203 billion recorded in the same month last year.
To meet the full year Rs 10 lakh crore capex target, the government will be required to invest Rs 1.4 lakh crore in March, the last month of the financial year. “This may be missed given the announcement of the model code of conduct during the month,” said Aditi Nayar, chief economist at ICRA.
According to Nayar, the surge in the fiscal deficit in February is partly due to higher tax devolution released to the states during that month. By end February in the current fiscal the centre released Rs 10.3 lakh crore to states as tax devolution against the full year target of Rs 11 lakh crore. So in March only Rs 70,000 crore tax devolution is required.