Economic Survey says fiscal deficit expected to be at 6.4% of GDP in FY 23

According to the latest Economic Survey, fiscal deficit is expected to be at 6.4% of GDP in FY 23. The Survey highlighted that conservative budget assumptions provided a buffer during global uncertainties. The resilience in the fiscal performance was due to a recovery in economic activity and buoyancy in revenues. Gross Tax Revenue registered a Year on year (YoY) growth of 15.5 % from April to November 2022, and the Net Tax Revenue to the Centre after the assignment to states grew by 7.9 % on a YoY basis, stated the Survey. Structural reforms like the introduction of GST and the digitalisation of economic transactions have led to the greater formalisation of the economy and hence expanded the tax net and enhanced tax compliance. Thus revenues have grown at a pace much higher than the growth in GDP. The Economic Survey highlighted that Direct taxes grew at 26 % Year On Year basis due to corporate and personal income tax growth in FY22. The Survey further added that growth rates observed in the major direct taxes during the first eight months of FY23 were much higher than their corresponding longer-term averages. The Survey informed that high imports have led to a 12.4 % YoY growth in the customs collection from April to November 2022. The excise duty collection has declined by 20.9 % from April to November 2022 on a YoY basis.

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