India’s fiscal deficit for FY21 stood at 9.3 per cent of GDP, lower than the 9.5 per cent estimated by the Ministry of Finance earlier in February.
The 0.2 per cent trim in final deficit numbers is due to the combination of compressed expenditure and higher revenue collections than initially estimated.
According to data released by the Controller General of Accounts (CGA), the fiscal deficit works out to Rs 18,21,461 crore in absolute terms, down from the revised budgetary estimate of Rs 18,48,655 crore.
But both numbers are supremely higher than the Rs 7.96 lakh crore, or 3.5% of GDP, that was envisaged last year before the pandemic struck.
FY21’s gross tax collection, at Rs 20.25 lakh crore, surpassed the previous year’s Rs 20.10 lakh crore on the back of higher excise and customs collections.
The excise duty collection, at Rs 3.89 lakh crore, was Rs 1.7 lakh crore more than the Rs 2.23 lakh crore recorded in the previous year.
This was mostly on account of higher taxes on fuel. Within this, net tax collections surpassed estimates by 6 per cent at over Rs 14 lakh crore. On the other hand, total expenditure was Rs 61,000 crore more than the revised estimate.
Total revenue receipts stood at Rs 16.32 lakh crore, higher than the revised estimate of Rs 15.55 lakh crore. Total receipts sood at Rs 16.89 lakh crore as against the revised estimate of Rs 16.01 lakh crore. Total capital expenditure was at Rs 4.24 lakh crore against revised estimates of Rs 4.38 lakh crore.
Collection from disinvestments was Rs 32,885.94 against revised estimates of Rs 32,000 crore.The government has set a target to reduce fiscal to 6.8 per cent of GDP this fiscal. This is higher than the 4.6 per cent seen in FY20 due to bleak revenue collections.
According to Care Ratings, the current fiscal’s 6.8 per cent target appears unlikely. The second wave of the pandemic would inevitably lead to shortfalls in government income and would be accompanied by an increase in expenditure towards controlling the pandemic and alleviating the impact of the same on the most vulnerable sections.
“Though there has been limited direct intervention by the government so far on the expenditure front, we believe that there would be more action expected given the transmission of Covid to rural areas. Tax collections will be pressurised... There may be significant shortfalls seen in disinvestment as well”.