NEW DELHI: Despite repeated assurances from the Centre, the fiscal deficit continues to widen on account of low revenue collection. By November end, it stood at Rs 7.17 lakh crore, exceeding 114.8 per cent of the budgeted target for the current fiscal. According to the government data, in the first eight months of the fiscal, revenue receipts stood at Rs 8.7 lakh crore or 50.4 per cent of the budgeted estimates (BE), compared to 53.1 per cent in the same period last year.
Tax revenue was at Rs 7.32 lakh crore, or 49.4 per cent of the BE against 57 per cent last year. The government is already staring at Rs 70,000 crore shortfall in indirect tax collection due to lower-than-expected GST collection. The revenue collection was targeted at Rs 1 lakh crore a month, but the collection crossed the mark only twice.
Increase in expenditure and subsidies also contribute to the widening fiscal deficit. Revenue expenditure climbed to Rs 14.21 lakh crore or over two-thirds of the BE. During the April-November period, the loans disbursed crossed `14,400 crore, which was 66.2 per cent of the BE.
The overall expenses on major subsidies came up to `2.19 lakh crore by April-November period, which was 83 per cent of the BE. Going forward, any populist announcement will make it more difficult to stick to the fiscal discipline. The fiscal deficit for the corresponding period last fiscal stood at 112 per cent.
While the Finance Minister has repeatedly assured that the government is on track to meeting its fiscal target for the current year, economists feel that the situation is unlikely to improve as the only way to match the revenue deficit is to cut expenditure in the next three months, which seems unlikely given that the government is already gone into the election mode.
“There are several risks to meeting the budgeted targets for revenues and expenditures, with one of the predominant concerns arising from a possible shortfall in indirect tax collections, despite the seasonal pickup in tax revenues in the last quarter of every fiscal,” said Aditi Nayar, Principal Economist, ICRA Ratings.