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Enormous rise in plan expenditure has pushed the Centre's fiscal deficit to 74.6% of the Budget Estimate (BE) in just five months of the current financial year.
The data may be quite disturbing for the Finance Ministry which has drawn a red line so far as BE for fiscal deficit for 2013-14 is concerned. The Budget estimated the deficit at 4.8% of GDP for 2013-14 against 4.9% in the previous financial year.
Data released by the Contrller General of Accounts today showed that the deficit stood at Rs 4.05 lakh crore during April-August, 2013-14 against the Budget Estimate of Rs 5.43 lakh crore for the financial year.
At this point of time last financial year, the Centre's fiscal deficit had stood at 65.7% of BE. Here, it should be noted that BE was 5.1% of GDP in 2012-13. And it was largely because of heavy dose of cuts in the plan expenditure that the government was able to rein in fiscal deficit at 4.9% of GDP in 2012-13.
Now, it is plan expenditure only which has ballooned the Centre's fiscal deficit in the first five months. The expenditure on this count stood at Rs 1.83 lakh crore, constituting 33% of Rs 5.55 lakh crore in BE. The plan expenditure had accounted for 28.4% of GDP at this time around in 2012-13.
Other parameters rose at more or less the same pace as in the first five months of the previous year, except non-debt capital receipts and tax receipts. Non-tax revenues were on the other hand were higher as percentage of GDP this time around.
Take for example non-plan expenditure. It was at Rs 4.80 lakh crore, accounting for 43.2% of Rs 11.10 lakh crore in the BE. It had constituted 43% of BE in April-August of 2012-13 as well.
Largely because of anomalies in plan expenditure, total outlay was at Rs 6.63 lakh crore in the first five months of the current financial year, which represented 39.8% of BE at Rs 16.65 lakh crore in BE. It accounted for 37.9% of BE in the first five months of 2012-13.
The Centre collected Rs 1.83 lakh crore from taxes in April-August which was 20.8% of Rs 8.84 lakh crore in BE for 2013-14. The collections had constituted 22.7% of BE in the corresponding period of 2012-13.
Slow growth in the economy is leading to fall in tax revenues. The economy grew just 4.4% in the first quarter of the current financial year. The real GDP growth would also pull down nominal economic growth as inflation is also not that high. The Budget had estimated nominal GDP to grow by 13.4% in 2013-14, which does not seem to be case now. If nominal GDP growth comes down, it will also magnify a give fiscal deficit as a percentage of GDP.
The government mopped up Rs 68,786 crore from non-tax revenue which was 39.9% of BE at Rs 1.72 lakh crore. It had constituted 29% of BE in the first five months of the previous fiscal.
Non-debt capital receipts were just Rs 5,813 crore, representing 8.7% of BE at Rs 66,468 crore. The receipts under this head had accounted for 12.2% of BE at this point of time. Within the category, disinvestment could yield just Rs 1,433.74 crore which was four% of BE at Rs 40,000 crore. The disinvestment figures were low last time around as well as it constituted just five% of BE.
Taken together, receipts in the first five months of the current financial were almost same as the corresponding period of last financial year in terms of proportion of BE. These stood at Rs 2.58 lakh crore in April-August, constituting 23% of BE at Rs 11.23 lakh crore. These receipts had accounted for 23.3% of BE this time around last financial year.
The Centre revenue deficit, which is a gap between current expendituure over current receipts, was at Rs 3.32 lakh crore. This was 87.4% of BE at Rs 3.79 lakh crore. It had stood at 79.2% of BE last time around.
Break-up of fiscal pain
| Receipts | Rs 1122799 crore | Rs 258285 Crore | 23% | 23.30% |
| Tax Receipts | Rs 884078 crore | Rs 183686 Crore | 20.80% | 22.70% |
| Non-Tax Revenue | Rs 72252 crore | Rs 68786 crore | 39.90% | 29% |
| Non-Debt Capital Receipts | Rs 66468 crore | Rs 5813 crore | 8.70% | 12.20% |
| Expenditure | Rs 1665297 crore | Rs 662936 crore | 39.80% | 37.90% |
| Plan Expenditure | Rs 555322 crore | Rs 183091 crore | 33% | 28.40% |
| Non-Plan Expenditure | Rs 1109975 crore | Rs 479845 crore | 43.20% | 43.00% |
| Fiscal Deficit | Rs 542499 crore | Rs 404651 crore | 74.60% | 65.70% |
Soruce: Controller General of Accounts
