The centre's fiscal deficit for the first two months (April-May) of 2021-22 came in at Rs 1.23 lakh crore, or 8.2 percent of the full year target of Rs 15.07 lakh crore, data released by the Controller General of Accounts showed on June 30.
The fiscal deficit for the same period last year had reached 58.6 percent of the full year target. That was in the middle of the nationwide lockdown, when the centre's revenues had all but dried up due to lack of economic activity, and expenditure commitments had increased.
The centre's net tax revenue for April-May 2021 was Rs 2.33 lakh crore, or 15 percent of the full year budget estimates, compared with just two percent for the same period last year.
Due to the bumper surplus transferred by the Reserve Bank of India to the government, non-tax revenue for the first two months came in at 48 percent of the full year target, compared with 2.8 percent for the same period last year.
"Benefitting from a jump in tax and non tax receipts amidst a contraction in revenue expenditure, the centre's fiscal deficit was limited to Rs. 1.2 lakh crore in April-May 2021, less than 30 percent of last-year's level of Rs. 4.7 lakh crore recorded during the nationwide lockdown," said Aditi Nayar, Chief Economist with ICRA Ltd.
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Revenue expenditure (also known as administrative expenditure) for April-May was 14.2 percent of the full year target compared with 17.4 percent for the same period last year. Capital expenditure came in at 11.4 percent compared with 13.4 percent.
Total expenditure for April-May 2021 came in at Rs 4.78 lakh crore, or 13.7 percent of the total budget size of Rs 34.83 lakh crore, compared with 16.8 percent for the same period last year.
Expenditure Commitments Rising
On June 28, Finance Minister Nirmala Sitharaman announced a relief package which the centre says is worth Rs 6.29 lakh crore, but from which the centre's own extra outlay is a little less than Rs 50,000 crore.
However, if one adds to that the earlier announced additional fertiliser of Rs 14,775 crore, the extension of the free foodgrain scheme under Pradhan Mantri Garib Kalyan Yojana which will cost the exchequer Rs 94,000 crore and the extra Rs 15,000 crore that the government is expected to spend after centralising 75 percent of the vaccine procurement, then the additional outlay this year could go up to Rs 1.72 lakh crore.
"The higher than budgeted transfer of surplus by the RBI and prepayment of the FCI's liabilities of around Rs 1 lakh crore provide a cushion of around Rs. 1.5-1.6 lakh crore. This should be adequate to cover the costs related to the free foodgrains, enhanced fertiliser subsidy and the economic relief package,"said ICRA's Nayar.
"Therefore, the magnitude by which the centre’s fiscal deficit in FY2021-22 will overshoot the budget estimates, will depend on how much of the disinvestment target of Rs. 1.75 lakh crore remains un-achieved at the end of this year," she said.