Centre's FY23 fiscal deficit narrows to 6.4% of GDP

The Centre's fiscal deficit narrowed to 6.4% of the GDP in 2022-23 from 6.71% in FY22, as anticipated by Finance Minister Nirmala Sitharaman in her Budget in February.

In the Union Budget, the government had said it aimed to further bring down the fiscal deficit -- a key indicator of borrowing -- during the current financial year 2023-24 to 5.9% of the gross domestic product (GDP).

Unveiling the revenue-expenditure data of the Union government for 2022-23, the Controller General of Accounts (CGA) said the fiscal deficit in absolute terms was ₹17,33,131 crore (provisional), marginally down from the amount projected in the Revised Estimates (RE) in the Budget.

CGA said the government received ₹24.56 lakh crore (101% of corresponding RE 2022-23 of total receipts) during 2022-23.

It comprised ₹20.97 lakh crore tax revenue (Net to Centre), ₹2.86 lakh crore of non-tax revenue and ₹72,187 crore of non-debt capital receipts.

Non-debt capital receipts consist of the recovery of loans and miscellaneous capital receipts.

About ₹9.48 lakh crore has been transferred to State governments as devolution of taxes by the central government, which is ₹50,015 crore higher than the previous year (2021-22).

The CGA data further revealed that the Centre's total expenditure was ₹41.89 lakh crore (100% of corresponding RE 2022-23), out of which ₹34.52 lakh crore was on the revenue account and ₹7.36 lakh crore on the capital account.

Out of the total revenue expenditure, ₹9.28 lakh crore was on account of interest payments and ₹5.31 lakh crore towards major subsidies.

As per CGA, the revenue deficit for the fiscal ending March 2023 was 3.9% of GDP while the effective revenue deficit worked out to be 2.8% of GDP.

Aditi Nayar, Chief Economist and Head - Research and Outreach, ICRA, said the government was able to restrict its FY2023 fiscal deficit at ₹17.3 lakh crore, a shade below the FY2023 RE, with higher than estimated revenue receipts and a small undershooting in revenue expenditure, offsetting the disinvestment miss and a healthier than expected capex.

"In FY2023, the government's net tax revenues reported a healthy growth of 15.2%, amidst a 17.8% contraction in non-tax revenues, 7.8% increase in revenue expenditure, and a robust 24.2% expansion in capex," she said.

Meanwhile, another set of CGA data showed that the fiscal deficit in the first month of the current fiscal was 7.5% of the Budget Estimate, up from 4.5% recorded in April 2022. In absolute terms, the deficit was ₹1.33 lakh crore.