Fiscal deficit crosses 61% of budgeted target in first quarter of FY 2019-20; key things to know : 01-08-2019

Fiscal deficit of India widened to Rs 4.32 lakh crore in the first quarter of the current financial year. India’s fiscal deficit was Rs 4.29 lakh crore in the same period of the previous fiscal year. The fiscal deficit stood at 61.4 per cent of the annual target of Rs 7.03 lakh crore in the first quarter. Finance Minister Nirmala Sitharaman has cut the fiscal deficit target from 3.4 per cent to 3.3 per cent for FY 2019-20. Fiscal deficit reached Rs 3.66 lakh crore by the end of May 2019. 

Total expenditure during April-June period stood at Rs 7.21 lakh crore or 25.9 per cent of BE, which was 29 per cent of the budget estimate in the corresponding period last fiscal year. The government has pegged the total expenditure during the current financial year at Rs 27.84 lakh crore. Revenue receipts stood at Rs 2.84 lakh crore by the end of June, which have been pegged at Rs 19.77 lakh crore for the entire year.

The fiscal deficit is the gap between expenditure and revenue and it signifies the financial health of the economy. Nirmala Sitharaman has repeatedly said that the fiscal deficit target of 3.3 per cent is realistic and can be achieved. However, some rating agencies have raised doubts about achieving the ambitious fiscal deficit target. 

“The realisation of the target for direct taxes and GST collections, and dividends and surplus from the RBI, nationalised banks, financial institutions, and PSEs, will be crucial to prevent a revenue slippage in FY20. Moreover, the speed with which the disinvestment programme kicks off, as well as the interest was shown by potential buyers in the PSUs being offered for strategic disinvestment, will be critical. At present, we can’t rule out that expenditure cuts may be required to prevent a fiscal slippage if the revenue targets are missed,” said Aditi Nayar, Principal Economist, ICRA.

Earlier this month, Finance Secretary Subhash Chandra Garg said that the revenue is likely to rise as they expect the direct tax collection to rise by 17.5 per cent and indirect taxes to rise by 15 per cent. He added that he also expects the rise in revenue on the non-tax side, taking cues from the better dividend. 

Source : Times Of India