Q1 fiscal deficit drops 1.38% YoY

The government's actual fiscal deficit for the quarter ended June 30, FY08 stood at 50.92% (Rs 76,873 crore) of the full year budget estimate of Rs 1,50,948 crore. This is 1.38 percentage points lower than the fiscal deficit for the same period last year.

However, given that the government incurred a capital expenditure of Rs 35,531 crore in acquiring the RBI's 59.7% stake in State Bank of India, the fiscal deficit stood higher at 74.5% for the quarter, versus 52.3% for the same period last fiscal, data released by the Controller General of Accounts on July 31 showed.

The SBI stake transaction is revenue neutral, because the Reserve Bank of India will return the money to its promoter (the central government) as dividend by August this year.

The 1.38 percentage points decline in fiscal deficit for the period under review is on account of better expenditure management, with total expenditure standing at 21.18%, versus 23.3% in the same period last year.

Non-plan expenditure, minus the RBI stake purchase, stood at Rs 96,468 crore, or 20.29% of the FY08 budget estimate of Rs 475,421 crore. Plan expenditure saw a 1.1 percentage point increase to 23.4% (Rs 47,901 crore) over the same period last fiscal.

The revenue deficit rose 12.6 percentage points, compared to the same period last fiscal, to Rs 68,646 crore or 96% of the Budget estimate for the current fiscal. Revenue collections rose on the back of higher tax collections at Rs 64,428 crore.

The fiscal deficit stood at 3.5% in FY07. As per the Fiscal Responsibility and Budget Management (FRBM) Act, the government is committed to reduce the fiscal deficit by an amount equivalent to 0.3% or more of the GDP at the end of each financial year, starting FY05.