 "April-Dec fiscal deficit touches 95% of Budget estimate")
However, there is a silver lining as well. The fiscal deficit touched Rs 5.16 lakh crore in the first nine months against Rs 5.42 lakh crore projected in the BE, according to figures released by the Controller General of Accounts (CGA) on Friday. This means, the government will have to restrain its over-spending to the tune of Rs 26,000 crore in the last quarter of FY14 in order to meet the fiscal deficit target . Till November 2013, fiscal deficit had stood at Rs 5.09 lakh crore. So, in a month’s time, over-spending rose Rs 7,000 crore. If this has been the trend in the past three months, then fiscal deficit could easily be checked according to the BE or even lower, at least in absolute numbers.
However, the pitfall is that India's economic size might not grow 13.4 per cent in 2013-14 as assumed in the Budget. Even after a favourable push, due to the downward revision of economic growth to 4.5 per cent in 2012-13 from five per cent earlier, growth in 2013-14 might be sub-five per cent only. The Wholesale Price Index-based inflation in the first nine months stood at 6.15 per cent. As such, growth in nominal terms may be sub-12 per cent. This would mean the fiscal deficit would have to be contained at lower than Rs 5.42 lakh crore to achieve 4.8 per cent of GDP target for 2013-14. That way, the target becomes much stiffer than earlier.
There is one more positive aspect of the data released by the CGA. Revenue deficit, which had overshot the BE till November 2013, came down to 97.7 per cent of the estimates till December 2013. It means, there were more revenues collected on the current account than spending.
Devendra Pant, chief economist and senior director with India Ratings, said this is because the third installment of advance tax payment on corporate income tax and the second one of self assessment tax on personal income tax came in December 2013.
Data showed that slowing down economy had an impact on public finance. Till December 2013, tax receipts stood at 58.6 per cent of BE against 62.8 per cent in the corresponding period of FY13. Even then, tax collections fell short of about Rs 30,000 crore in the entire year.
Among other receipts, non-debt capital receipts including disinvestment yielded the exchequer just 20.3 per cent of the BE, while the receipts were 38.1 per cent at this point in 2012-13. Even then, disinvestment had touched just over Rs 25,000 crore in 2012-13 against BE of Rs 40,000 crore.
Now, the sale of Suuti in Axis Bank, the government's residual equity in Hindustan Zinc and cross-holding in IOC are expected to provide money to the exchequer on this front. The government has targeted to raise Rs 54,000 crore from direct disinvestment and residual equity stake in non-government companies.
Last year, the government resorted to heavy cuts in Plan expenditure to rein in fiscal deficit at 4.9 per cent of the gross domestic product (GDP), much lower than 5.1 per cent pegged in the Budget and 5.2 per cent projected in the Revised Estimate.
Till December 2013, Plan expenditure represented 63.3 per cent of the BE against 56.8 per cent in the previous year.
Pant said the government is likely cut Plan expenditure this time as well to bring fiscal deficit closer to the BE. He, however, cautioned that excessive cut in the Plan expenditure can harm growth now, when economy is slowing down.
India Ratings has projected the deficit to be at 4.9 per cent of GDP, a shade higher than BE.
Non-Plan expenditure was also a bit higher as the percentage of BE in the first nine months of FY14. It stood at 73.2 per cent of the BE against 71.7 per cent in the first nine months of FY13.