Helped by higher dividends and tax receipts, the Centre’s fiscal deficit was contained at Rs 3.78 lakh crore or 68.1% of the FY16 budget estimates in the first six months of the fiscal even after giving a good-enough booster dose to Plan Expenditure. In the first half of last fiscal, the fiscal deficit stood at 82.6% of the corresponding target.
The fiscal deficit in April-September was Rs 3.78 lakh crore, while the deficit estimated in the Budget (BE) for the full year is Rs 5.56 lakh crore. While revenue receipts have been rather strong, the Centre also managed to curb non-Plan expenditures, mostly of the routine variety and not reckoned to be very productive in nature.
Gross tax collections grew about 22% to Rs 5.96 lakh crore in April-September as against just 7% in the same period a year ago. After transfers to states, the tax revenue stood at Rs 3.69 lakh crore or 40.2% of the BE compared with 33.1% in the year ago period.
Total revenue receipts in April-September stood at Rs 5.13 lakh crore, or 45% of the BE of Rs 11.41 lakh crore, thanks to a higher dividend of Rs 75,545 crore, most of it from the central bank’s surplus profit transfer. For the same period last year, revenue receipts were 35.1% of the BE.
Total expenditure in April-September was Rs 9.1 lakh crore or 51.2% of the BE, according to data compiled by the Controller General of Accounts. Total expenditure in the same period last year was 48% of the BE for that year.
In April-September, Plan Expenditure stood at Rs 2.54 lakh crore or 54.6% of the BE, which is a substantial improvement compared to 42.8% of the BE in the year-ago period. Non-Plan spending during the first six months of FY16 stood at Rs 6.57 lakh crore, or 50% of the BE against 50.5% of the BE of FY15. While the deficit has been contained better than last year so far, the government seems to be clamping down on non-Plan spending to make room for some additional spending commitments to be met in later months, including bank capitalisation. The narrowing of fiscal deficit in the first six months could remove concerns about achieving the target of 3.9% of GDP in FY16 despite a likely shortfall in tax revenues of Rs 50,000 crore in FY16 and likely significant underachievement of disinvestment target of Rs 69,500 crore.
Analysts say fall in crude prices and higher indirect tax collections due to increases in tax rates in the latest budget, has given the Centre some breathing space for fiscal management.