The spectrum bonanza and higher tax collections have helped the Centre restrict its fiscal deficit during the first half of the current financial year to 34.9 per cent of the budget estimate for 2010-11, compared to 49.3 per cent in the period a year ago.
This is the lowest level of fiscal deficit during the first half of any financial year since 1998-99, the period for which data are available on the Controller General of Accounts (CGA) website. There have been only two instances in the last 13 years when fiscal deficit in the first half has been less than 40 per cent of the budget estimate. At the end of the first half, fiscal deficit stood at 38.3 of the budget estimate (BE) in 2000-01, while it was 38.7 per cent of BE in 2004-05.
According to the data released by CGA, the Centre’s fiscal deficit is estimated to have decreased by 32.62 per cent to Rs 1,33,252 crore during the six months ended September, compared to Rs 1,97,775 crore in the first six months of 2009. The government has budgeted for a fiscal deficit of Rs 3,81,408 crore for the current financial year.
In the first half of the financial year, the Centre’s net tax revenue has increased by 25.72 per cent to Rs 2,33,415, with Customs (62 per cent) and central excise (41 per cent) seeing the sharpest rise. What really contributed to the surge in revenue receipts was mainly on account of a 2.8-times rise in non-tax revenue to Rs 1,64,819. This was mainly on account of the over Rs 100,000 crore received through the sale of airwaves for broadband wireless access and third-generation (3G) mobile telephony.
The higher non-tax revenue also helped improve the revenue deficit, which declined by 54.59 per cent to Rs 74,921 crore at the end of September, compared to Rs 1,64,983 in the period a year ago. At the end of the first half, revenue deficit stood at 27.1 per cent of BE, which is also the best ever since 1998-99. In the first half of 2000-01, revenue deficit had stood at 34 per cent of GDP.
While the government is trying to get back into fiscal shape, there is little change on the expenditure side. The Centre’s total expenditure has gone up by nearly 20 per cent to Rs 5,37,977 crore. This is 48.5 per cent of BE, compared to 44 per cent in the first half last year.
