India’s fiscal deficit during April-July 2023 stood at Rs 6.06 lakh crore, or 33.9 per cent of the full financial year target, according to the latest official data released on Thursday. The fiscal deficit widened from 20.5 per cent reported in the comparable year-earlier period.
Fiscal deficit, which is the difference between the total expenditure and revenue of the government, is an indication of the total borrowings that are needed by the government.
According to the data, total receipts during April-July were at Rs 7.75 lakh crore, while overall expenditure stood at Rs 13.81 lakh crore. They were 28.5 per cent and 30.7 per cent of the full FY24’s budget target.
Aditi Nayar, chief economist and head (research and outreach) at ICRA, said, “The Government of India’s fiscal deficit jumped to Rs 6.1 trillion or 34 per cent of the FY2024 BE in April-July FY2024 from Rs 3.4 trillion in the first four months of FY2023, led by higher revenue and capital expenditure and an up-fronting of tax devolution to the state governments. While net tax revenues contracted by 13%, non tax revenues doubled on the back of the RBI dividend, amidst a 16% rise in revenue expenditure, and a robust 52% YoY expansion in capex.”
She added that notwithstanding the YoY spike in the GoI’s fiscal deficit and high inflation print anticipated for August 2023, we expect the 10-year G-sec to range between 7.15-7.25% in the near term, driven by global trends.
Gross tax collections rose by a mild 3% YoY in April-July FY2024, dampened by direct taxes, offsetting the healthy growth in GST collections and customs duty. In July 2023, excise duty emerged from several months of sustained contraction emanating from the cut on cess on petrol and diesel in May 2022, eking out a mild 2% growth.
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