The central government has met its fiscal deficit target of 6.4 percent of GDP for 2022-23, data released by the Controller General of Accounts on May 31 showed.
At Rs 17.33 lakh crore, the fiscal deficit for 2022-23 amounts to 6.4 percent of the GDP. However, in absolute terms, it is lower than the revised estimate of Rs 17.55 lakh crore by Rs 22,188 crore.
The Budget for 2023-24 had seen the finance ministry make an upward revision in the fiscal deficit target for 2022-23 from Rs 16.61 lakh crore. However, with the size of India's economy in 2022-23 expected to exceed the Budget estimate, the fiscal deficit as a percentage of GDP was seen unchanged from the initial target of 6.4 percent.
The Centre was able to comfortably meet the fiscal deficit target in 2022-23 thanks to its net tax revenue exceeding the revised estimate by 0.5 percent, while non-tax revenue beat expectations by 9.3 percent. However, disinvestment fared badly, with proceeds from it coming in at Rs 46,035 crore - missing the revised target of Rs 60,000 crore.
On the whole, total receipts exceeded the revised estimate by 1 percent.
When compared to 2021-22, the Centre's receipts were 11.2 percent higher, with net tax revenue up 16.2 percent. However, non-tax revenue was down 21.6 percent year-on-year as the Reserve Bank of India (RBI) transferred a dividend of only Rs 30,307 crore - well below the Centre's estimate of Rs 73,948 crore from the central bank and public sector banks.
At the same time, the government was able to keep a lid on its spending, with total expenditure a marginal Rs 1,605 crore lower than the revised target of Rs 41.87 lakh crore. However, capital expenditure - which the government has focussed on over the last couple of years to boost economic growth - exceeded expectations by a handy Rs 8,551 crore, coming in at Rs 7.36 lakh crore.
Data also released on May 31 showed the Centre's fiscal deficit for the first month of 2023-24 was Rs 1.34 lakh crore, amounting to 7.5 percent of the full-year target of Rs 17.87 lakh crore.
The numbers for April did not make for great reading, as total receipts were down 14.7 percent year-on-year, with net tax revenue lower by 13.9 percent. Total expenditure, meanwhile, was up 10.6 percent even though capital spending fell by 0.6 percent.
However, the prospects for the Centre's finances this year remain fairly good, particularly in light of the RBI transferring a bumper dividend of Rs 87,416 crore to the Centre earlier this month.
"Moreover, ICRA expects the fertiliser budgetary allocation for 2023-24 to remain adequate, at the current juncture," said Aditi Nayar, chief economist at ICRA. According to Nayar, fiscal concerns "appear limited".
The government is looking to reduce its fiscal deficit to 5.9 percent of GDP this year and to 4.5 percent by 2025-26.
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