The finance ministry has said that transitional impact of Goods and Services Tax (GST) and the support given to farmers to deal with poor agricultural situation in India in FY 2018-19 led to the 0.1 percentage point drift in fiscal deficit to 3.4 per cent.
According to an official statement on half-yearly review of the trends in receipts and expenditure in relation to the budget at the end of the financial year 2018-19, while GST was launched in July 2017 and was in the process of stabilisation, FY 2018-19 was the first full financial year after the introduction of the GST regime.
“Additionally, farmers needed support to manage the changes in the agricultural economy that were underway. The government needed to play a critical and an effectively large role by providing support to farmers to manage these changes to minimize distress in the sector. These reasons necessitated a minor deviation in the fiscal deficit target of the government,” said the finance ministry.
Being an election year, the government had launched Pradhan Mantri Kisan Samman Nidhi or PM Kisan Scheme under which the government had announced income support for small farmers.
The scheme said that small and marginal farmers who own less than five acres of land will receive three instalments of Rs 2,000 each every year or Rs 6,000 per year and was aimed at helping 120 million farmer families. The scheme cost Rs 20,000 crore in 2018-19, and Rs 75,000 crore in 2019-20.
Further, this resulted in an increase in expenditure and allocation for the agriculture ministry that rose from Rs 57,600 crore in 2018-19 (BE) to Rs 1.41 lakh crore in 2019-20. Total expenditure was estimated at Rs 24,57,235 crore in RE 2018-19 compared to provisional figure of Rs 23,11,422 crore at the end of 2018-19.
In 2018-19, fiscal deficit was budgeted at Rs 6,24,276 crore or 3.3 per cent of projected GDP. It was revised to Rs 6,34,398 crore or 3.4 per cent of GDP in RE 2018-19.
The y-o-y inflation based on the Wholesale Price Index during H2 of 2018-19 was 3.7 per cent as compared to 3.3 per cent during the corresponding period of the previous year and 4.9 per cent in H1 of 2018-19.
The non-debt capital receipts were 14.5 per cent lower than the previous year. Total net receipts of the Centre were Rs16,66,054 crore which were about 7.4 per cent higher than receipts of the previous financial year.