April-September fiscal deficit at Rs 7 lakh crore, tax collections remain robust

In September, the Indian government's net tax revenue rose 14.3 percent year-on-year to Rs 3.56 lakh crore. This was due to a 26.6 percent increase in corporate tax collections to Rs 2.12 lakh crore, while personal income tax collections rose 15.6 percent to Rs 91,247 crore. This propelled total receipts 9.3 percent higher in September.

For April-September, the Centre's total receipts are up 17.7 percent, with corporate tax collections 20.2 percent higher than last year and the income tax mop-up 31.1 percent higher.

As per the 2023-24 budget, the growth in corporate and personal income tax collections forecast this year from what was collected in 2022-23 was 11.7 percent and 11.4 percent, respectively.

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"With a 27 percent rise in corporation tax collections in September amidst healthy advance tax inflows, nearly 49 percent of the 2023-24 BE (Budget Estimate) had been collected, which is an encouraging trend. Moreover, half the personal income tax target of 2023-24 BE had been achieved in H1 2023-24 (April-September)," Aditi Nayar, Chief Economist at ICRA, said.

Like in August, the Centre transferred Rs 72,961 crore to states as tax devolution, taking the total for the first half of 2023-24 to Rs 4.55 lakh crore, 21.1 percent higher year-on-year.

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

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On the expenditure side, the government's capex push continued, as spending on investments was up 29 percent in September and 43.1 percent in April-September at Rs 4.91 lakh crore. Since then, the Centre's capital expenditure has crossed the Rs 5-lakh-crore mark, Moneycontrol reported on October 23 quoting a government source.

The capex focus pushed total spending of the Centre to Rs 21.19 lakh crore in April-September, 16.2 percent higher from last year.

Interestingly, while the first six months of 2023-24 have seen the government collect more than half (52.2 percent) its budgeted revenue, its expenditure has been less than half of what it had projected (47.1 percent). As such, this puts it well on track to meet the fiscal deficit target of 5.9 percent of GDP for this year, although some unanticipated expenditure could crop up given the national elections around the second quarter of 2o24.