The central government's fiscal deficit stood at Rs 3.52 lakh crore in April-June, accounting for 21.2 percent of the full-year target, data released on July 29 by the Controller General of Accounts showed.
The fiscal deficit in the first three months of FY22 was Rs 2.74 lakh crore. As such, the fiscal deficit in the first quarter of the current financial year is 28.3 percent higher on a year-on-year basis.
The fiscal deficit for April-June 2021 had accounted for 18.2 percent of the FY22 target.
The Centre is targeting a fiscal deficit of Rs 16.61 lakh crore for FY23, or 6.4 percent of GDP.
The widening of the fiscal deficit in June - a month in which it posted a deficit of Rs 1.48 lakh crore - is partially due to the hit to the government's finances after it announced a cut in the excise duty on petrol and diesel in late May.
Economists expect the Centre's revenues to take a hit of more than Rs 80,000 crore in FY23 from the excise duty cut alone.
Excise duty collections in June were Rs 30,402 crore, down 1.8 percent from the same month last year.
Overall, gross tax collections were up 22.4 percent in April-June but only 12.8 percent higher in June at Rs 6.50 lakh crore and Rs 2.47 lakh crore, respectively.
Non-tax revenue, meanwhile, was down over 50 percent in April-June, with the Centre still trying to shrug off the impact of the sharply lower than expected dividend from the Reserve Bank of India, which was transferred in May.On the whole, total receipts for April-June were 8.9 percent higher compared to last year.
|KEY HIGHLIGHTS OF CENTRE'S FINANCES FOR APRIL-JUNE (in Rs lakh crore)|
|APR-JUN||% CHANGE YoY||% OF BUDGET TARGET|
|Net tax revenue||5.06||22.6%||26.1%|
With regard to spending, June was another good month for capital expenditure as the Centre crept closer to its budget target of Rs 7.5 lakh crore.
In June, the Centre racked up a capital expenditure of Rs 67,990 crore, taking the sum for the first quarter of FY23 to Rs 1.75 lakh crore - or 23.4 percent of the full-year target.
While capex surged 40.1 percent year-on-year in June, total expenditure grew at a more sedate pace of 5.4 percent to Rs 3.62 lakh crore. For April-June, total expenditure of the central government was Rs 9.48 lakh crore, 15.4 percent higher than what it was in the first quarter of FY22.
While the Centre's finances look in good shape so far, the coming months could see risks emerge as the global uncertainty and growth downturn takes a toll and the government is forced to spend more on key heads such as food and fertiliser subsidy. At the same time, revenues could come under pressure if further excise duty cuts are announced to protect consumers from the eye-wateringly high petrol and diesel prices and ease inflation.
"Unless the free foodgrain scheme is extended beyond September, we do not expect the fiscal deficit to exceed 6.4 percent of GDP based on a nominal GDP growth assumption of 15 percent," noted Aditi Nayar, chief economist at ICRA.The Pradhan Mantri Garib Kalyan Anna Yojana, or PM-GKAY, was extended by six months in March. The provision of free foodgrain under the scheme until September will cost the Centre Rs 80,000 crore.