NEW DELHI: India’s fiscal deficit has expanded to 63.6% of the budgetary target for the current financial year until January. The increase is attributed to slower capital expenditure and a more comfortable revenue expenditure scenario compared to the same period in the previous financial year.
The fiscal deficit has reached Rs 11.02 lakh crore out of the total limit of Rs 17.34 lakh crore. The target was revised to 5.8% of the GDP from the initial 5.9% estimate in the 2023 budget. In January alone, the fiscal deficit rose by Rs 1.2 lakh crore, following the typical pattern of a quarterly increase. The pace of capital expenditure slowed in the first month of the fourth quarter, with capex amounting to Rs 47,557 crore in January, down from Rs 87,985 crore in December.
The total capex for the fiscal year is at Rs 7.21 lakh crore, representing 75.9% of the revised capex target of Rs 9.49 lakh crore, slightly lower than the corresponding period last year.
“The Government of India’s fiscal deficit stood at Rs 11.0 trillion or 64% of the FY2024 RE in April-January FY2024, lower than the 111.9 trillion recorded in April-January FY2023. While net tax revenues rose by 11%, non-tax revenues expanded by 46% boosted by the RBI dividend, amidst a tepid 1.4% growth in revenue expenditure, and a strong 26.5% YoY expansion in capex,”said Aditi Nayar, Chief Economist, Head Research and Outreach, ICRA Ltd.
“While there may be some slippage in the disinvestment target and capex may trail the FY2024 RE, ICRA does not expect the revised fiscal deficit target of Rs 17.3 trillion for FY2024 to be breached,” she further added.
Core sector growth falls to 3.6%
The growth of eight key infrastructure sectors hit a 15-month low at 3.6% in January, primarily due to declines in fertilizer and refinery production, compounded by the base effects of 2023 when these sectors had grown by 9.7% in the same month. The Commerce and Industry Ministry also revised the growth rate for December 2023 to 4.9% from the previous estimate of 3.8%. Overall, the growth rate for these sectors dipped to 7.7% cumulatively, down from 8.3% in April-January 2022-23. The Index of Core Industries (ICI) contributes over 40% to the Index of Industrial Production (IIP). Despite this slowdown, output rose for the second consecutive month, reaching a ten-month high in absolute terms. Refinery products fell 4.3% in January, marking their first contraction in nine months, while electricity generation rebounded from a 1.2% increase in December to a 5.2% rise in January. Coal output growth decelerated to 10.2%, still maintaining a seventh consecutive month of double-digit growth. ENS