The Centre's fiscal deficit rose to 58.9 percent of the FY22 target in April 2021-January 2022, data released on February 28 by the Controller General of Accounts showed.
In April-December 2021, the fiscal deficit had amounted to 50.4 percent of the full-year target.
The latest numbers on the government's finances come after the 2022 Budget said the Centre would exceed its fiscal deficit target of 6.8 percent of Gross Domestic Product (GDP) by 10 basis points.
However, even at 6.9 percent, the targeted fiscal deficit for the current financial year would represent a huge improvement from last year.
In FY21, the deficit jumped to 9.2 percent due to a surge in government expenditure to combat the pandemic and revenues taking a hit from economic activity coming to a standstill because of restrictions imposed to contain the spread of the coronavirus.
The government's finances are in far better shape this year. In the first 10 months of FY21, the fiscal deficit had amounted to 66.8 percent of the revised target for the full year.
The 2021 Budget had revised the fiscal deficit target for FY21 to Rs 18.49 lakh crore from Rs 7.96 lakh crore after the government took into account the impact of the pandemic on its spending and revenues.
|Apr 2021-Jan 2022 (in Rs lakh crore)||YoY change (in %)||% of FY22 target|
|Net tax revenue||15.47||40.4%||87.7%|
The rise in fiscal deficit in January 2022 was driven by a 32.1 percent fall in receipts and expenditure rising 21.6 percent.
But even as total spending saw a healthy increase, capital expenditure continued to lag, shrinking by 5.8 percent, when compared to last year, to Rs 50,042 crore.
Overall, the Centre's capital expenditure in April 2021-January 2022 amounted to Rs 4.42 lakh crore. While this is 22 percent higher on a year-on-year basis, it is only 73.4 percent of the full-year target. To meet its target, the central government will need to spend Rs 1.60 lakh crore on capital expenditure in February-March 2022.
The Centre has looked to push capital expenditure to boost growth and propel the economy out of the slowdown caused by the COVID-19 pandemic. Meeting the target, then, is key.
The 2022 Budget set aside a mammoth Rs 7.50 lakh crore for capital expenditure for FY23.
Even the overall expenditure target looks daunting. In April 2021-January 2022, the Centre has spent Rs 28.09 lakh crore as against the revised target of Rs 37.70 lakh crore. To meet the target, the central government will have to spend Rs 4.80 lakh crore in both February 2022 and March 2022.
So far this year, the maximum the government has spent in any month has been Rs 4.46 lakh crore, in December 2021.
On the revenue side, gross tax revenue contracted by 4.4 percent in January 2022 to Rs 1.69 lakh crore, driven down in part by excise tax collections slumping 24.3 percent to Rs 29,884 crore.
Prime Minister Narendra Modi had announced a cut in the excise duty on petrol and diesel in November 2021.