Fiscal deficit improved to 6.7% in FY22

Higher tax mop up helps; official estimates released in February had pegged deficit at 6.9% of GDP

Glide path:The government estimates fiscal deficit for FY23 at 6.4% of GDP, or Rs. 16.6 lakh crore.Nagara Gopal

Fiscal deficit improved to 6.71% of the FY22 GDP over the revised budget estimate of 6.9% mainly on account of higher tax realisation.

Unveiling the revenue-expenditure data of the Union government, the Controller General of Accounts (CGA) said that the fiscal deficit in absolute terms was Rs. 15,86,537 crore (provisional). The Finance Ministry had in February estimated the deficit at Rs. 15,91,089 crore or 6.9% of GDP.

Tax receipts during the fiscal were at Rs. 18.2 lakh crore as against the revised estimates (RE) of Rs. 17.65 lakh crore, the data showed.

Total expenditure too was higher at Rs. 37.94 lakh crore against the RE of Rs. 37.7 lakh crore presented to Parliament on February 1, 2021. The CGA further said the revenue deficit at the end of the fiscal was 4.37% for fiscal year 2021-22.

In another set of data, the CGA said the fiscal deficit during the first month of FY23 was 4.5% of the Budget Estimate for the current fiscal. The deficit was 5.2% a year earlier. The government said it expected the fiscal deficit for the current financial year at 6.4% of GDP, or Rs. 16.61 lakh crore.

In April 2022, there was a revenue surplus of Rs. 591 crore. Government meets its fiscal deficit from market borrowings.

Revenue collections were about Rs. 27 lakh crore, almost Rs. 5 lakh crore above the budget estimates, said Vivek Jalan, Partner, Tax Connect Advisory.

‘Analytics aids revenue’

“The spurt in tax revenues, especially GST collection, was mainly a result of DGARM, which is the Data Analytics wing of the GST Council,” Mr. Jalan said.

Aditi Nayar, chief economist, ICRA, said the provisional data indicated that the fiscal deficit of the Centre was contained marginally below the FY22 revised estimate, benefitting from the higher tax and non-tax revenue receipts and lower capital spending, which absorbed the deficit in non-debt capital receipts and higher revenue expenditure.

‘Risks to FY23 target’

On the outlook for FY23, Ms. Nayar said there were several risks to the fiscal deficit target of Rs. 16.6 lakh crore, emanating from the revenue loss to the Centre on account of the excise duty cut, lower-than-budgeted transfer of the RBI’s surplus, and the need for additional spending on food, fertilizer and LPG subsidies through the year.