Govt meets fiscal deficit target of 3.5% at Rs 5.92 trillion for 2017-18

The central government just about met its revised fiscal deficit target for 2017-18. The gap for the year ending March 31 was Rs 5.92 trillion, or 3.52 per cent of the full year’s nominal Gross Domestic Product (GDP) of Rs 167.73 trillion, showed official data released on Thursday.

Finance Minister Arun Jaitley, in his 2018-19 budget, had revised the deficit target to Rs 5.95 trillion or 3.5 per cent of GDP, upward from the earlier Rs 5.46 trillion or 3.2 per cent. The stated reason was disruption in economic activity from lingering effects of demonetisation and rollout of a nationwide goods and services tax (GST).

The controller-general of accounts (CGA) also released the monthly income data for the first month of 2018-19. April’s fiscal deficit was Rs 1.52 trillion or 24 per cent of the full-year target of Rs 6.24 trillion, compared with 37.6 per cent for the same period last year. This was primarily due to lower revenue expenditure, arising from lesser carried-over arrears, as Business Standard had reported earlier.

The CGA data shows total spending in 2017-18 was Rs 21.43 trillion or 96.6 per cent of the revised estimates. Total receipts were Rs 15.51 trn or 95.6 per cent of the full-year revised estimates. The revenue deficit was Rs 4.43 trn or 101 per cent of the full-year target.

“The seasonal trend of revenue receipts outpacing revenue expenditure in March and a reversal in certain loans that had been extended previously led to the total fiscal deficit for FY18 printing marginally lower than the revised estimate. However, the revenue deficit for FY18 has modestly exceeded the revised level,” said Aditi Nayar, principal economist at ratings agency ICRA.

“Tax and non-tax revenues, as well as revenue and capital expenditure, have fallen short of the revised estimates for FY18. Disinvestment receipts stood out as the only major category of receipts that surpassed the revised estimate for the year,” she added.

Also, said Nayar, while revenue expenditure expanded by 11.5 per cent in 2017-18, capital spending contracted 9.2 per cent, a dip in the quality of spending.

For April, capital expenditure showed a jump in absolute and in relative terms, in what is the second year of an advanced budget presentation. Capital spending in the first month of 2018-19 was 15.3 per cent of the full-year target, compared with nine per cent for the same period a year before. However, revenue spending came down due to lower pending payments.

For 2018-19, Nayar said: “The buoyancy in GST collections, whether excise duty on fuels is cut to absorb a part of the impact of higher crude oil prices, and the extent to which dividends and profits and disinvestment meet the budgeted targets, would drive the government’s revenue growth.”

Also: “The adequacy of budgeted outlays for the proposals introduced in the Union Budget for FY19 such as MSPs (floor prices for agri-produce) and the National Health Protection Scheme, fuel and other subsidies, and bank recapitalisation, would affect the fiscal space for spending over the course of the year.”