Fiscal deficit at 64% by January; Capex slid last month

Centre has room to ramp up revenue and capital spending over February and March, but capex targets may not be met, economists reckon

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The Centre’s capital expenditure slipped by a sharp 40.5% in January at ₹47,600 crore compared with ₹80,000 crore a year ago, while the fiscal deficit hit 64% of the revised estimates for 2023-24 by the end of January.

With just two months to go in the financial year, the government is likely to miss its capex target and is also behind on its revenue expenditure plans, but it appears comfortably on track to meet the revised deficit goal of 5.8% of GDP, economists reckoned.

“With ₹2.3 lakh crore left to be incurred in February and March to meet the full year target for capex, we expect the capex to undershoot by at least ₹50,000 crore,” said ICRA chief economist Aditi Nayar. Gross tax revenues need to rise just 6% over these two months to hit the 2023-24 goal and corporate taxes are likely to surpass last year’s collections, she reckoned.

Bank of Baroda chief economist Madan Sabnavis noted that only around 75% of the total planned expenditure for the year has been incurred in the first ten months, so the scope for higher expenditure in the last two months is very high. “This also gets reflected in the high cash balances of the government observed this month,” he said.

Interestingly, less than 70% of planned expenditure has been achieved in the ministries of Agriculture and Consumer Affairs, which deal with outlays on the PM Kisan scheme and food subsidies, he said, and the rural development ministry has similar spending levels as well. The overall fiscal deficit stood at ₹11 lakh crore by January, lower than the ₹11.9 lakh crore over the same period 2022-23.