With two more months in this financial year, the Centre’s fiscal deficit has already touched 92 per cent of the Budget estimate. The deficit, the gap between the government's expenditure and revenue, more than doubled to Rs 3.81 lakh crore in the first nine months of 2011-12 from Rs 1.71 lakh crore in the corresponding period of the previous financial year.
The government has already realised it would not be able to rein in the deficit at 4.6 per cent of the gross domestic product (GDP), as was projected in the Budget. Though estimations of the revised fiscal deficit vary, most economists and finance ministry officials said it might increase by a percentage point, as a proportion to GDP.
Nominal GDP in the last financial year was revised slightly downwards, because of which, the deficit rose to 4.8 per cent of GDP from 4.7 per cent estimated earlier. It is still far below the Budget estimate of 5.5 per cent and the revised estimate of 5.1 per cent for that year.
The slight downward revision in nominal GDP may help the government rein in fiscal deficit, as a percentage of GDP, marginally. However, the expected fall in real GDP growth from the projected nine per cent to a little over seven per cent for the current financial year would adversely affect the government's tax revenue, particularly direct taxes. This would more than offset any statistical advantage due to revision in the base effect.
The Centre's tax receipts stood at Rs 4.20 lakh crore till December, 63.3 per cent of the Budget target for the entire financial year. In the corresponding period of the previous financial year, it stood at 73.2 per cent. However, the real impact on the deficit is not much from taxes, rather from non-tax receipts and non-debt capital receipts.
As the sale of telecom spectrum helped the government garner Rs 1 lakh crore in the last financial year, against the budgeted Rs 35,000 crore, non-tax receipts stood at 130.4 per cent of Budget estimates. However, this time, these are just Rs 78,077 crore, 62.2 per cent of Budget estimates.
Similarly, non-debt capital receipts were worth just Rs 16,858 crore, 30.6 per cent of Budget estimates, against 69.4 per cent in the first nine months of the last financial year. Disinvestment yielded only a little over Rs 1,100 crore to the government, against the budgeted Rs 40,000 crore.
Plan expenditure, as a portion of Budget estimates till December, was less than last year's. It stood at Rs 2.76 lakh crore, 62.7 per cent of Budget estimates, against 67 per cent in the corresponding period of the previous financial year. Non-plan expenditure was Rs 6.19 lakh crore, 75.9 per cent of Budget estimates, compared with 73 per cent in the year-ago period.
