The Reserve Bank on Wednesday expressed doubt over the government’s ability to contain fiscal deficit at the budgeted 6.8% this fiscal after it moved the second supplementary demand of grants worth ₹3.73 lakh crore which came in spite of a massive 83% jump in net tax revenue so far this year to ₹10.53 lakh crore.
The government has budgeted for total expenditure of ₹34.83 lakh crore or 6.8% of GDP.
While the net tax revenue rose from ₹5,75,697 crore in October 2020 to ₹10,53,135 crore till October 2021, total expenditure rose only by 9.95%, led by infra spending to ₹18,26,725 crore from ₹16,61,454 crore during the period, the RBI said in the financial stability report.
Total expenditure grew 9.9%, with capital outlay expanding 28.3%, the RBI said.
“But with the second supplementary demand of grants worth ₹3.73 lakh crore, presented in December, the budgeted fiscal deficit of 6.8% of GDP may come under strain,” the central bank warned.
Though the size of gross government borrowing has proceeded at a pace that suggests that budget estimates would be adhered to, RBI said the Centre’s repayment obligations indicate a significant uptrend going forward, implying that gross borrowing is likely to remain elevated, notwithstanding fiscal consolidation.