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Revenues from tax and disinvestment were short of the target; expenditure, plan and non-plan, rose. The deficit was Rs 5.99 lakh crore during April-February of 2013-14, about 14.3 per cent higher over the RE of Rs 5.24 lakh crore. The BE was set at Rs 5.42 lakh crore.
However, the month of March might see some fiscal surplus, as advance tax payments came and disinvestment gathered pace. The exchequer has to draw a fiscal surplus of Rs 75,000 crore in March to meet the RE target and Rs 57,000 crore to meet the BE target.
Economists said meeting the RE target might be difficult, though the deficit could be somewhere near to the BE. The RE had estimated the fiscal deficit to be 4.6 per cent of gross domestic product (GDP) and the BE at 4.8 per cent.
“We might well be somewhere closer to 4.8 per cent,” said Devendra Pant, chief economist at India Ratings.
D K Joshi, his counterpart at CRISIL, said they’d projected the deficit at 4.8 per cent of GDP and it stuck to this number, unless sharp corrections happened in March.
To gauge how difficult the target is, the fiscal surplus in March 2013 was no more than Rs 17,469 crore.
However, Finance Minister P Chidambaram was optimistic. At a Congress briefing, he said, “Analysts all over the world look at fiscal deficit numbers while looking at stability of the economy and we have contained that.”
The economy’s slowing impacted tax receipts. Tax revenue, net of state devolutions, was Rs 6.27 lakh crore till February, 75 per cent of the RE of Rs 8.36 lakh crore. At this point last financial year, it was 77.1 per cent of RE.
The economy is officially projected to grow 4.9 per cent in 2013-14, the second year in a row when the economy would expand below five per cent.
However, officials were hopeful of meeting at least the direct tax collection targets. The tax department had collected Rs 6.23 lakh crore till March 30, against the target of Rs 6.36 lakh crore, including states’ share. Officials were confident of Rs 13,000 crore coming on the last day of the financial year.
The government was not able to meet even the truncated target of disinvestment proceeds, pegged at only Rs 16,027 crore in the RE against the Rs 40,000 crore projected in the BE. Actual divestment proceeds were Rs 5,939 crore. These proceeds were 95 per cent of the RE in 2012-13.
Total revenue was a little over Rs 8 lakh crore, 75.1 per cent of the RE target. It was lower than the 78.3 per cent in the corresponding period of 2012-13.
The Centre incurred plan expenditure of Rs 4.09 lakh crore, about 86 per cent of the RE at Rs 4.75 lakh crore. At this point in FY13, it was 82.3 per cent of RE. Non-Plan expenditure was Rs 9.9 lakh crore or 88.9 per cent of the RE at Rs 11.14 lakh crore. It was higher than the 86.5 per cent in the corresponding period last year.
The revenue deficit, gap between non-capital expenditure and revenue, was 117.3 per cent of RE. It was Rs 4.34 lakh crore against the RE of Rs 3.70 lakh crore. Many economists consider the revenue deficit a more serious problem than the fiscal deficit because it means the government is borrowing to meet even its consumption expenditure.
