In absolute terms, the budget deficit – the gap between income and expenditure that is met by borrowing – stood at 3.52 lakh crore at the end of June, according to data released by the Comptroller General of Accounts (CGA). .
The budget deficit had stood at 18.2% of revised estimates for FY22 at the end of June 2021.
Tax revenue at the end of the first quarter stood at ₹5.06 lakh crore, 22% higher than the same quarter last year. Non-tax revenue contracted by 51.2% over the same period due to a 69.4% drop in the surplus transferred from the RBI to the Center, leading to a decline in overall revenue which increased by a low 5.2%.
Total expenditure amounted to ₹9.48 lakh crore, or 24% of the target for the full year. This includes capital expenditure of ₹1.75 lakh crore, up 57% from last year. Revenue expenditure increased by 9% over last year.
Rajani Sinha, Chief Economist at CareEdge (formerly
), said the Center is not expected to compromise on capital expenditure, or capex, in the coming quarters despite additional subsidies and the loss of revenue from fuel excise duty cuts. However, subsidy bills can also climb, she said.
“We will see the food subsidy bill increase in the coming quarters,” Sinha said, adding that the drop in subsidy spending is mainly due to the central government postponing payment of its food subsidy bill.
India’s budget deficit is projected at 6.4% of GDP for FY23 from 6.7% the previous year.
Experts expect the government to meet the target through strong tax revenues. “We do not expect the fiscal deficit to exceed 6.4% of GDP based on an assumption of nominal GDP growth of 15%,” said Aditi Nayar, chief economist at the rating agency. .
India Ratings said high levels of inflation in the economy would boost nominal GDP, which would help the government not only meet, but exceed its tax collection targets for FY23.
“…the windfall tax on crude oil and other export duties, together with the tax dynamism, will provide sufficient leeway/fiscal space for the union government to undertake higher spending on the subsidy and cover the loss of revenue due to reduction of excise duty on petrol/diesel,” India Ratings said. He expects the FY23 budget deficit to be 6.2% to 6.4% of GDP.