The Centre’s fiscal deficit in the first four months of FY19 came in at Rs 5,40,257 crore or 86.5% of the FY19 target, according to the Controller General of Accounts (CGA) data released on Friday. Though this appeared to be inconsistent with the fiscal consolidation plan, the situation was still better than the year-ago period when the deficit had touched 92.4% of the annual target.
A squeeze in revenue spending — especially those on urea and micro soil nutrients subsidies — and stronger-than-usual non-tax revenues helped the Centre.
During initial months of a fiscal, the revenue streams are traditionally thin, making deficits appear bloated. Going by this, the latest figures aren’t really worrisome if revenues pick up. However, the sluggisshness in disinvestment receipts and the shortfall in GST revenue are causes for concerns. Also, the likelihood of stepped up spending during the second half of the year in the run up to next year’s general elections could also strain the fisc.
The Centre’s fiscal deficit for FY19 is budgeted at 3.3% of the GDP against the actual of 3.5% in FY18.
Budgetary capital expenditure in April-July 2018, however, stood at Rs 1,11,337 crore, 17% higher than the year-ago period and 37.1% of the full-year target, indicating the continued heavy reliance on public investments for growth amid scarce evidence of a much-awaited recovery in private investments.
The pace of overall spending has been marginally slower so far this year than the year-ago period, due to revenue spending squeeze. The Centre’s total expenditure was `8.9 lakh crore or 36.4% of the FY19 target, compared to 37.7% of the target in the corresponding period last year.
In April-July 2018, the Centre’s tax revenue (net of transfers to states) stood at Rs 2.93 lakh crore or 19.8% of the FY19 Budget estimate (BE), as compared to 21% of the corresponding target in the year-ago period. Thanks to higher receipts from “general and economic services,” non-tax receipts were at 17.6% of the current year’s target in April-July, against 11.5% of the relevant target in the corresponding period last year. Non-debt capital revenue, including disinvestment receipts, in the first four months of FY19 was at 14.9% of the annual target, almost at the same level of the corresponding period last year.
Subsidy on urea in April-July of FY19 was `12,354 crore, 33% lower than the year-ago period, while that on nutrient-based fertilisers was about `2,543 crore lower than year-ago period. Petroleum was down `4,011 crore. Food subsidy outgo was up by `3,560 crore.