Till July, fiscal deficit half of FY13 Budget estimates

During the April-June period, the fiscal deficit already touched 8.1% GDP

The Centre’s fiscal deficit till July this financial year stood at Rs 2.64 lakh crore, 51.5 per cent of the Budget estimate of Rs 5.13 lakh crore for 2012-13, showed data released on Friday.

During the April-June period, the fiscal deficit already touched 8.1 per cent of quarterly gross domestic product (GDP). Economists say this raises concern on whether the government would be able to rein in fiscal deficit at 5.1 per cent of GDP this financial year, as estimated in the Budget.

The excess of government expenditure over revenue rose 38.8 per cent to Rs 2.64 lakh crore till July this financial year, against Rs 1.90 lakh crore till June, according to the data.

NUTS & BOLTS

• 9% growth in government final consumption expenditure, against 4.8% in Q1 last year
   
• 38.8% rise in excess of govt expenditure over revenue till July in 2012-13, from Rs 1.90 lakh cr to Rs 2.64 lakh cr
   
• 43.4 % growth in non-plan expenditure of the govt till July in 2012-13 to Rs 3.23 lakh cr from Rs 2.25 lakh cr in the Apr-Jun period

GDP data for the quarter ended June shows government final consumption expenditure grew a massive nine per cent, against 4.8 per cent in the year-ago period and 4.13 per cent in the quarter ended march. Though this boosted the economy by leading to 7.9 per cent growth in community, social and personal services, fiscal deficit worsened.

Till July, total receipts touched Rs 1.72 lakh crore, 17.7 per cent of the Budget estimate, while total expenditure touched 30 per cent of the Budget estimate. In the first four months of 2012-13, expenditure stood at Rs 4.37 lakh crore. The government’s non-Plan expenditure rose a massive 43.4 per cent to Rs 3.23 lakh crore till July, compared with Rs 2.25 lakh crore till June. Till July, non-Plan expenditure touched 33.3 per cent of the Budget target for 2012-13. Plan expenditure rose 32.2 per cent to Rs 1.13 lakh crore till July this financial year, against Rs 86,221 crore till the previous month.

In the first four months of this financial year, tax revenue stood at Rs 1.42 lakh crore, 18.5 per cent of the Budget target for 2012-13. It was also higher than in the year-ago period, when it stood at 17.2 per cent of the Budget target for last year. Till July, non-tax revenue stood at 15.8 per cent of the Budget target, against 18.4 per cent for last year.

Assuming the fiscal deficit between July and March 2013 rises at last year’s rate, fiscal deficit this financial year would be 5.79 per cent of GDP (Rs 101 lakh crore, as estimated in the Budget). However, with a pick-up in growth in the second half, as policy makers say is likely, tax collections would improve, and this may help contain the deficit. Finance Minister P Chidambaram has asked 13th Finance Commission Chairman Vijay Kelkar, and members Indira Rajaraman and Sanjiv Misra, to suggest a path for fiscal consolidation.