In what may be interpreted as definite indications of intense pressure on the fiscal front, official data on Friday revealed that the government has exceeded almost two-thirds of the budgeted fiscal deficit target set for 2013-14 in a span of just four months.
As per the data, the Centre’s fiscal deficit during the April-July period in the current financial year has already peaked at Rs.3.40 lakh crore, which works out to 62.8 per cent of the budget estimate (BE) for the entire fiscal.
The pressure can be gauged from the fact that in the same four-month period of 2012-13, the fiscal deficit was much lower at 51.51 per cent of the budget estimate.
What is of greater concern is that the fiscal deficit for the April-July period this year does not take into account a higher-than-budgeted outgo on food and oil subsidies, especially when taking into consideration the huge depreciation in the value of the rupee against the U.S. dollar.
In specific terms, while the government has budgeted for Rs.90,000 crore as food subsidy for the current fiscal year, the actual outgo is likely to be close to Rs.1.13 lakh crore following implementation of the food security legislation.
On oil front
Likewise, against a provision of Rs.20,000 crore as subsidy on the oil front, the actual spending is expected to be much higher on fuels such as diesel and domestic cooking gas unless the government decides on at least a partial pass-through to the consumer.
Net tax receipts
As per the data, the net tax receipts for the first-four months of 2013-14 added up to Rs.1.45 lakh crore while government’s total spending amounted to Rs.5.21 lakh crore.
However, having brought down the fiscal deficit to 4.9 per cent in 2012-13 from a high of 5.8 per cent in the previous fiscal, Finance Minister P. Chidambaram has asserted time and again that the fiscal deficit target of 4.8 per cent of the GDP (gross domestic product) set for 2013-14 will not be breached under any circumstances.
In effect, there is likely to be further compression in Plan expenditure unless revenue realisations are on the upswing following an economic recovery during the remaining months of the current fiscal.
Echoing Mr. Chidambaram’s commitment in his statement on the sate of the economy in Parliament earlier during the day, Prime Minister Manmohan Singh said: “The government will do whatever is necessary to contain the fiscal deficit to 4.8 per cent of GDP this year. The most growth-friendly way to contain the deficit is to spend carefully, especially on subsidies that do not reach the poor, and we will take effective steps to that end…”
The government’s accounting data showed that while the revenue deficit during April-July 2013 rose to Rs.2.77 lakh crore — which is 73 per cent of the budget estimate as compared to 61.3 per cent in the like period of 2012 — it was mainly due to lower revenue collection which slowed down to 16.7 per cent of the budget estimate (Rs 1.76 lakh crore) as compared to 18 per cent in the previous fiscal.
Alongside, while total receipts stood at 16.1 per cent of the budgeted estimate during the four months this fiscal as compared to 17.7 per cent in 2012-13, the total expenditure was higher at 31.3 per cent of the estimate as against 29.3 per cent a year earlier.
