NEW DELHI: The government has unexpectedly revised the fiscal deficit target for 2021-22 upwards to 6.9% from the budgeted 6.8% after different ministries and departments expressed confidence in ramping up spending in the last quarter of the financial year. “Our revised fiscal deficit estimate largely reflects the capacity expressed by the spending departments,” says a finance ministry official.
The official told TNIE that even if the ministry had doubts (on the likely spending in the last quarter of the financial year), they did not want to deny the departments a chance to ramp up spending by putting any cap in the budget. He admitted that in the current financial year, there is a need to ramp up spending.
“We have capital spending departments which are saying give us this much money and we will spend it. We may think they may not be able to spend so much money but if we apply our judgment and cut it (the allocation), they won’t be able to even try spending the amount,” says the official.
He says if the concerned departments fail to spend the money allocated in the revised budget, there might be some undershooting (of the fiscal deficit target). Many analysts and economists were of the view that given the spending trend so far in the current financial year, the government may not cross the 2021-22 fiscal deficit target as till December 2021, the Centre’s fiscal deficit has reached only 50.4% of the budget target of Rs 15 lakh crore.
Total expenditure till Dec was Rs 25.2 lakh cr, 72.4% of the budget target of Rs 34.8 lakh cr. The expenditure target for this year has been revised upwards to Rs 37.7 lakh cr, which means the government expects to spend Rs 12.5 lakh cr in the last quarter of FY22. Of the Rs 37.7 lakh crore, Rs 6 lakh crore is earmarked for capital expenditure and Rs 31.67 lakh crore for revenue expenditure.
Deficit at just 50% of target so far this year
Many analysts and economists were of the view that given the spending trend so far in the current financial year, the government may not cross the 2021-22 fiscal deficit target as till December 2021, the Centre’s fiscal deficit has reached only 50.4% of the budget target of Rs 15 lakh cr.