The centre is confident that it will bring down its fiscal deficit to 5.9% of gross domestic product (GDP) in 2023-24 from 6.4% recorded in the previous year, despite a likely increase in spending due to higher fertiliser, fuel and food subsidy bills, a Finance Ministry source said.
Fiscal deficit is the difference between a government’s expenditure and revenue. It is the most important indicator of an administration’s financial health, and is measured as a percentage of nominal GDP. Finance Minister Nirmala Sitharman has targeted a deficit of 5.9% of GDP.
Due to a number of factors including rise in global commodity prices and uneven monsoon at home, there is pressure on the centre’ expenditure. Prime Minister Narendra Modi government has decided to extend the distribution of free ration under Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) by five years.
The scheme was scheduled to end in December and provisions will have to be made for three months of the current fiscal. Hike in minimum support price (MSP) for wheat and pulses will also have an implication.
Additionally, expenses on MNREGA scheme is also likely to be higher than the budget allocation of Rs 60,000 crore.
Despite these increases, the official said the fiscal deficit target would be met. "We are sticking to the budget numbers," the official said, adding that the buoyancy in tax collections would help in bridging the budget gap.
As per official data, revenues from direct taxes - including personal income tax and corporate tax - soared nearly 22% year-on-year to Rs 10.60 lakh crore till November 9. Revenue collection from Goods and Services Tax (GST) has hit record highs in the current financial year, with average monthly collection till October at Rs 1.66 lakh crore.
The official said growth in tax revenue collection in the current fiscal is projected to be 10.5%, which is in line with the projected growth in nominal GDP.
Published 15 November 2023, 22:37 IST