The government’s fiscal deficit for the first seven months of this financial year totalled Rs 4.76 lakh crore, a staggering 89.6 per cent of the target of Rs 5.31 lakh crore for the entire financial year.
The fiscal deficit for the April-October period this year was the highest since at least 1998-99. For the corresponding period of 2013-14, the fiscal deficit was 84.4 per cent of the FY14 target.
With data for five months yet to come, policy watchers have voiced concern on whether the 2014-15 fiscal deficit target of 4.1 per cent of gross domestic product will be met. “Achieving the fiscal deficit target is going to be difficult. The situation is always there to cut expenditure,” said Madan Sabnavis, chief economist at CARE Ratings. “We expect shortfall in tax revenues, especially with indirect taxes, due to weak industrial output and imports.”
According to the data released by the Controller General of Accounts on Friday, net tax revenue for April-October stood at Rs 3.69 lakh crore, only 37.7per cent of the FY15 Budget estimate (BE) of Rs 9.77 lakh crore, while non-tax revenue was Rs 1.11 lakh crore (52.3 per cent of the BE of Rs 2.12 lakh crore). For the corresponding period of 2013-14, tax and non-tax revenues stood at 40.3 per cent and 57.8 per cent of their respective FY14 targets.
For April-October, non-debt capital receipts were Rs 6,264 crore, or 8.5 per cent of the FY15 BE of Rs 73,952crore, compared with 12.2 per cent for the corresponding period last year, primarily due to a dismal performance on the disinvestment front this year. The government’s overall expenditure in the September quarter was Rs 9.62 crore, or 53 per cent of BE. Non-Plan expenditure was Rs 6.95 lakh crore for April-October FY15, or 57 per cent of the BE of Rs 12.2 lakh crore, compared with 59 per cent for the year-ago period.
Plan expenditure for the first seven months of this financial year stood at Rs 2.67 lakh crore, or 46.4 per cent of the year’s BE of 5.75 lakh crore, compared with 48.3 per cent for the corresponding period last year.
As reported by Business Standard earlier, to meet the FY15 fiscal deficit target, termed “sacred” by Finance Minister Arun Jaitley, he might have to opt for spending cuts of at least Rs 35,000-40,000 crore.
“We see a significant cut in expenditure, and it is inevitable that a large portion of it will come from capital spending,” Sabnavis said. While lower crude oil prices will lead to lower fuel subsidy for the year, officials have conceded the revenue department is likely to miss direct and indirect tax revenues in FY15.
The Centre’s plan to raise Rs 58,425 crore through disinvestment this year, with stake sales in 10 public sector undertakings, residual stake sale in Hindustan Zinc and Balco, and the government’s holding in Axis Bank, Larsen & Toubro and ITC through SUUTI, has not yet taken off. As it stands, the government has to exceed the budgeted revenue estimates from disinvestment, spectrum auctions (about Rs 9,300 crore) and special dividends from state-owned companies and banks (Rs 90,229.2 crore) or risk slashing capital spending, something former finance minister P Chidambaram was criticised for.
The fiscal deficit for the April-October period this year was the highest since at least 1998-99. For the corresponding period of 2013-14, the fiscal deficit was 84.4 per cent of the FY14 target.
With data for five months yet to come, policy watchers have voiced concern on whether the 2014-15 fiscal deficit target of 4.1 per cent of gross domestic product will be met. “Achieving the fiscal deficit target is going to be difficult. The situation is always there to cut expenditure,” said Madan Sabnavis, chief economist at CARE Ratings. “We expect shortfall in tax revenues, especially with indirect taxes, due to weak industrial output and imports.”
According to the data released by the Controller General of Accounts on Friday, net tax revenue for April-October stood at Rs 3.69 lakh crore, only 37.7per cent of the FY15 Budget estimate (BE) of Rs 9.77 lakh crore, while non-tax revenue was Rs 1.11 lakh crore (52.3 per cent of the BE of Rs 2.12 lakh crore). For the corresponding period of 2013-14, tax and non-tax revenues stood at 40.3 per cent and 57.8 per cent of their respective FY14 targets.
For April-October, non-debt capital receipts were Rs 6,264 crore, or 8.5 per cent of the FY15 BE of Rs 73,952crore, compared with 12.2 per cent for the corresponding period last year, primarily due to a dismal performance on the disinvestment front this year. The government’s overall expenditure in the September quarter was Rs 9.62 crore, or 53 per cent of BE. Non-Plan expenditure was Rs 6.95 lakh crore for April-October FY15, or 57 per cent of the BE of Rs 12.2 lakh crore, compared with 59 per cent for the year-ago period.
Plan expenditure for the first seven months of this financial year stood at Rs 2.67 lakh crore, or 46.4 per cent of the year’s BE of 5.75 lakh crore, compared with 48.3 per cent for the corresponding period last year.
As reported by Business Standard earlier, to meet the FY15 fiscal deficit target, termed “sacred” by Finance Minister Arun Jaitley, he might have to opt for spending cuts of at least Rs 35,000-40,000 crore.
“We see a significant cut in expenditure, and it is inevitable that a large portion of it will come from capital spending,” Sabnavis said. While lower crude oil prices will lead to lower fuel subsidy for the year, officials have conceded the revenue department is likely to miss direct and indirect tax revenues in FY15.
The Centre’s plan to raise Rs 58,425 crore through disinvestment this year, with stake sales in 10 public sector undertakings, residual stake sale in Hindustan Zinc and Balco, and the government’s holding in Axis Bank, Larsen & Toubro and ITC through SUUTI, has not yet taken off. As it stands, the government has to exceed the budgeted revenue estimates from disinvestment, spectrum auctions (about Rs 9,300 crore) and special dividends from state-owned companies and banks (Rs 90,229.2 crore) or risk slashing capital spending, something former finance minister P Chidambaram was criticised for.