Fiscal deficit gap widens in H1

The country may be headed towards a fiscal slippage for the second consecutive year as the fiscal deficit has already touched 95.3% of the budgeted estimate.

In the first six months of FY 2018, the country witnessed a fiscal deficit that reached 91.3% of then budgeted estimates. Last year, the country saw slippages of 20 basis points for the full year as the government missed fiscal deficit targets.

The government has budgeted to cut fiscal deficit to 3.3% of GDP in 2018-19 from 3.53% in the previous financial year.

In actual terms, the fiscal deficit or gap between the total expenditure and receipts was Rs 5.94 lakh crore during April-September this fiscal.

The government has received Rs 7,09,483 crore (39.03% of BE 18-19 for total receipts) up to September 2018, according to data released by the Finance Ministry on Thursday.

This comprises Rs 5,82,783 crore from tax revenue, Rs 1,08,969 crore of non-tax revenue and Rs 17,731 crore of non-debt capital receipts. Non-debt capital receipts consist of recovery of loans worth Rs 7,786 crore and disinvestment of PSUs worth Rs 9,945 crore.

On the other hand, the government has incurred Rs 13,04,215 crore (53.4% of BE for 2018-19) in expenditures till the year-end.

Of the total expenditure, Rs 11,41,586 crore is on the revenue account and Rs 1,62,629 crore is on the capital account. Out of the total revenue expenditure, Rs 2,55,432 crore has been spent by the government on account of interest payments and Rs 1,88,291 crore on subsidies.

Meanwhile, the Finance Ministry also said that Rs 3,22,189 crore has been transferred to state governments as the "devolution of share of taxes by the Government of India up to this period which is Rs 33,093 crore higher than the corresponding period of last year 2017-18".

Experts suggest that the increase in the fiscal deficit has been triggered by shortfalls in revenue generation as well as increased crude prices and the falling rupee.