NEW DELHI: The slowing down of capital expenditure has helped the central government keep its books in order with fiscal deficit contracting by 6.6% in the first seven months (April-October) of the current financial year, according to the data released by the government.
The fiscal deficit (difference between total receipts and expenditure) during the period was Rs 7.5 lakh crore, which is 46.5% of the budget target of Rs 16.13 lakh crore. In the same period the previous year, the fiscal deficit had breached Rs 8 lakh crore mark.
The central government’s spending on infrastructure and other assets (capex) has dropped by 14.7% to Rs 4.7 lakh crore during the first seven months of the year. Last year during the same period, the total capex was Rs .5 lakh crore. In the current financial year, the Centre has a target of spending Rs 11.11 lakh crore on capex.
Revenue expenditure of the government – the spending on salaries and pension payments – increased by 8.7% to Rs 20 lakh crore. The total expenditure of the government breached 51.3% of the budget target of `48.2 lakh crore. Meanwhile, the growth in gross tax collection during April-October has moderated to 10.8%, down from 12% up to September.
In October 2024, the gross tax collection remained stagnant at Rs 2.2 lakh crore, registering a growth of only 1.64%. Corporate tax collection in October 2024 registered a decline of 14% to Rs 26,365 crore compared to Rs 30,686 crore in the same period last year.
In the April-October period, corporate tax collections remained stagnant at Rs 4.88 lakh crore as compared to Rs 4.82 lakh crore. Income tax collections during till October registered a growth of 20.2% to Rs 6.3 lakh crore. Central gross domestic product collections increased by 11% to Rs 5.2 lakh crore.
The government has set a target of limiting the fiscal deficit to 4.9% of the FY25 gross domestic product (GDP). But now with moderation in capital expenditure, and higher dividend by the Reserve Bank of India, the government might reduce the fiscal deficit further. According to an India Ratings estimate, the fiscal deficit could come down to 4.71% of the FY25 gross domestic product.