April-July fiscal deficit at Rs 3.41 lakh crore; July sees first fiscal surplus since start of pandemic

The central government's fiscal deficit stood at Rs 3.41 lakh crore in April-July, accounting for 20.5 percent of the full-year target, data released on August 31 by the Controller General of Accounts showed.

The fiscal deficit for April-July 2021 had accounted for 21.3 percent of the FY22 target.

The fiscal deficit in the first four months of FY22 was Rs 3.21 lakh crore. As such, the fiscal deficit in April-July of the current financial year is 6 percent higher on a year-on-year basis.

The Centre is targeting a fiscal deficit of Rs 16.61 lakh crore for FY23, or 6.4 percent of GDP.

This is the first time in 28 months that the Centre has posted a fiscal surplus. The last time it did so was in March 2020, at the beginning of the coronavirus pandemic.

The fiscal surplus in July was possible due to a 38 percent year-on-year increase in the Centre's net tax revenue to Rs 1.6 lakh crore, with non-tax revenue more than doubling to Rs 27,423 crore. This helped boost total receipts by 40 percent to Rs 1.9 lakh crore.

Total expenditure, meanwhile, dropped by 2 percent in July to Rs 1.79 lakh crore, although capital expenditure nearly doubled from last year to Rs 33,606 crore.

For April-July as a whole, the Centre's total receipts stood at Rs 7.86 lakh crore, up 15 percent, while total expenditure was 12 percent higher at Rs 11.27 lakh crore.

The Centre's finances look in very good shape so far this financial year, with the fiscal deficit at only a fifth of the target at the end of the first third of the year.

The good fiscal situation led the Centre, on August 10, to release Rs 1.17 lakh crore to states as tax devolution - double of what it would have normally transferred.

The Centre's tax devolution to states is done in 14 instalments every year. For FY23, this works out as Rs 58,333 crore a month. While Rs 47,592 crore was transferred to states in each of the first three months of FY23, Rs 58,333 crore was transferred in July, data released today by the Controller General of Accounts showed. As such, in April-August, the Centre released Rs 3.18 lakh crore to states - or 39 percent of the full-year estimate of Rs 8.17 lakh crore.