Capital spending may be cut to prevent breach of fiscal deficit targets

Gross of devolution to the states, both direct and indirect taxes have recorded a modest growth in April-July 2018, with the former likely to be on account of high refunds

While the year-on-year (YoY) rise in the fiscal and revenue deficit in the first four months of FY2019, and the piercing of the full year budget estimate for the revenue deficit, are discomfiting, this nevertheless comes on the back of the seasonal trend of modest revenue collections in the early part of the year.

Revenue growth stood at a healthy 15% in April-July 2018, outpacing the 9% rise in revenue expenditure and allowing for a robust 17% expansion in capital outlay. However, for the month of July 2018, while revenue expenditure recorded a considerable 21% growth, capital spending displayed a