India's April-November fiscal deficit at Rs 9.07 lakh crore, 51% of FY24 target

The central government has set itself a medium-term target of reducing the fiscal deficit to under 4.5 percent of GDP by 2025-26.

The central government's fiscal deficit widened to Rs 9.07 lakh crore in April-November from Rs 8.04 lakh crore in April-October, data released by the Controller General of Accounts on December 29 showed.

At Rs 9.07 lakh crore, the fiscal deficit for the first eight months of the current financial year accounts for 50.7 percent of the full-year target of Rs 17.87 lakh crore.

The fiscal deficit in April-November 2022 was 58.9 percent of the target for 2022-23.

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For the fourth month in a row, the Centre's monthly fiscal deficit was lower compared to the year-ago period, coming in at Rs 1.03 lakh crore in October, down 53 percent year-on-year (YoY).  This was driven by a near doubling of receipts as well as a contraction in the Union government's expenditure.

In November, the government's total expenditure was down 14 percent YoY at Rs 2.58 lakh crore, with capital expenditure up a mere 2 percent at Rs 38,721 crore. With two-thirds of 2023-24 over, the Centre has now fallen behind the run-rate needed to meet its record full-year capex target of Rs 10 lakh crore, with the figure for April-November standing at Rs 5.86 lakh crore, or 58.5 percent of the target.

For the first eight months of 2023-24, the government's total spending stood at Rs 26.52 lakh crore, 9 percent higher than the same period last year. Total receipts, meanwhile, were up 19 percent YoY in April-November at Rs 17.46 lakh crore, thanks to a 43 percent increase in non-tax revenue on account of the huge surplus transferred by the Reserve Bank of India (RBI) in May.

Also Read: How RBI's dividend gives Centre a much-needed helping hand

In fact, the Centre's non-tax revenue in April-November, at Rs 2.84 lakh crore, has almost matched the entire collection for 2022-23 and is now only Rs 17,285 crore away from this year's target with four months still to go.

But it was from taxes that the government's bottomline benefitted the most, as net tax revenue in November recorded a growth of 149 percent, while gross tax collections were up 21 percent YoY at Rs 2.08 lakh crore.

The huge growth in November in net tax collections was due to the Centre transferring a larger amount of money to states in November 2022 (Rs 1.17 lakh crore) compared to Rs 72,961 crore in November 2023.

Transfers to states as tax devolution reduce the Centre's net tax collections.

Also Read: Centre transfers Rs 1.46 lakh crore as tax devolution to states in December

The impressive increase in gross tax collections in November was primarily due to corporate tax collections increasing by 84 percent YoY, while personal income tax collections rose a more sedate 13 percent. For April-November as a whole, the corporate tax mop-up stands at Rs 5.14 lakh crore, 20 percent higher YoY, while personal income tax collections are up 29 percent at Rs 5.67 lakh crore.

As per the 2023-24 budget, the Centre's target for corporate and personal income tax collections is Rs 9.23 lakh crore and Rs 9.01 lakh crore, respectively. Meanwhile, the budget target for net tax collections is Rs 23.31 lakh crore. In April-November, the Centre's net tax collections amount to Rs 14.36 lakh crore.

The government gets two big installments of advance tax in the months of December and March.

The latest set of numbers on the government's finances will further add to the finance ministry's confidence that it will comfortably meet its fiscal deficit target of 5.9 percent of GDP for 2023-24. The budget for 2024-25, which will be presented by Finance Minister Nirmala Sitharaman on February 1, 2024, is expected to announced a sizable reduction in the fiscal deficit for next year on the way to meeting the target of 4.5 percent of GDP for 2025-26.