 "Fiscal deficit")
Aided by higher than expected tax receipts, the Union government contained the fiscal deficit — the gap between expenditure and revenue — at 5.6 per cent of the gross domestic product (GDP) in 2023-24 (FY24), compared with the Revised Estimates of 5.8 per cent.
The fiscal deficit stood at Rs 16.54 trillion in FY24, against the budgetary target of Rs 17.86 trillion, according to government data released on Friday. The Interim Budget presented in February had revised the fiscal gap estimate from the initial 5.9 per cent of GDP to 5.8 per cent for FY24. A fiscal deficit arises when government spending exceeds its revenue.
According to the data, net tax receipts for FY24 were above projections at Rs 23.27 trillion. The total amount spent (expenditure) that year stood at Rs 44.43 trillion, which was 99 per cent of the budgeted amount. The fiscal deficit for April stood at 12.5 per cent, or Rs 2.1 trillion, of the full-year target, on unexpected revenue expenditure.
The Centre has set an FY25 fiscal deficit target of 5.1 per cent, or Rs 16.85 trillion, in order to achieve a fiscal deficit of 4.5 per cent of GDP by FY26.
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Economists expect fiscal dynamics to remain favourable in the current financial year amid strong tax receipts and an unexpectedly large dividend payout by the Reserve Bank of India (RBI).
“The windfall arising from the RBI dividend is likely to provide additional leeway of Rs 1 trillion to the government for enhanced expenditures or a sharper fiscal consolidation than what was pencilled in the Interim Budget for FY25,” said Aditi Nayar, chief economist, ICRA.
The RBI board last week approved the transfer of Rs 2.11 trillion ($25.35 billion) as surplus to the Union government for FY24.
According to the Interim Budget estimates for FY25, the Bharatiya Janata Party-led government had budgeted for a dividend of Rs 1.02 trillion from the central bank, state-run banks, and other financial institutions.
“The total expenditure has increased from around Rs 41.9 trillion to around Rs 44.4 trillion, an uptick of about 6 per cent, and yet the fiscal deficit lowered by about 5 per cent. This could be attributed to the efficiency of the Central Board of Direct Taxes and Central Board of Indirect Taxes & Customs and the ground covered in the implementation of artificial intelligence in unearthing fake transactions,” said Vivek Jalan, partner, Tax Connect Advisory Services LLP.
India’s direct tax collections grew by 17.7 per cent year-on-year to Rs 19.58 trillion in FY24, exceeding the Revised Estimates by Rs 13,000 crore and Budget Estimates by Rs 1.35 trillion. Earlier, the government had projected Rs 18.23 trillion as net direct tax revenue for FY24, which was later revised upwards to Rs 19.45 trillion. GST collections for FY24 increased 11.7 per cent to Rs 20.14 trillion.
