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India's fiscal deficit, the difference between government expenditure and revenue, has reached a significant level in the first five months of the current fiscal year. The deficit stood at 27% of the full-year target, according to government data released on Monday. This translates to a deficit of Rs 4,35,176 crore as of August-end, highlighting the government's considerable spending compared to its revenue collection during this period.
While this figure represents a concerning trend, it's important to note that the government has projected a fiscal deficit of 4.9% of the gross domestic product (GDP) for the entire 2024-25 financial year. This target is a reduction from the 5.6% deficit recorded in 2023-24. To achieve this goal, the government aims to keep the total fiscal deficit at Rs 16,13,312 crore for the current fiscal year.
Analyzing the revenue and expenditure data for the first five months, the Controller General of Accounts (CGA) revealed that net tax revenue reached Rs 8.7 lakh crore, amounting to 33.8% of the Budget Estimates (BE) for the current fiscal year. This represents a slight decrease compared to the 34.5% of BE achieved at July-end 2023. However, the total expenditure for the four months leading up to August reached Rs 16.5 lakh crore, constituting 34.3% of the BE. This figure is slightly lower than the 37.1% of BE expenditure recorded in the corresponding period of the previous fiscal year. Of the total expenditure, Rs 13,51,367 crore was allocated towards the revenue account, while Rs 3,00,987 crore was directed towards the capital account. Notably, Rs 4,00,160 crore of the total revenue expenditure was dedicated to interest payments.
The fiscal deficit serves as an indicator of the government's borrowing needs. As the difference between total expenditure and revenue widens, the government requires additional borrowing to finance its activities. This can have implications for debt levels and potentially impact the economy's overall financial health. While the government aims to control the fiscal deficit through various measures, including revenue generation and expenditure management, it remains a crucial aspect to monitor closely in the coming months.
Source: Fiscal Deficit For 2024-25 Projected At 4.9% Of GDP As Expenditures Rise