Tag: fiscal deficit

April to December fiscal deficit increases to Rs 9.93 lakh crore

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India’s fiscal deficit for the April to December period increased to Rs 9.93 lakh crore, which was 59.8 percent of the 2022-23 fiscal year target. India’s fiscal deficit in the same period last year had come in at Rs 7.59 lakh crore.

For December, India reported a fiscal deficit of Rs 14,800 crore compared to last year’s Rs 63,800 crore.

A country’s fiscal deficit is the difference between the total expenditure and revenue of the government in a year.

For the nine-month period ending December 2022, the net tax revenue came in at Rs 15.55 lakh crore, which was 80.4 percent of the entire financial year’s estimate.

Combined with the non-tax revenue, the total revenue receipts for the April-December period stood at Rs 17.69 lakh crore, which is 80.3 percent of the Budget estimate for FY23.

The April to December capital expenditure increased to Rs 4.9 lakh crore from last fiscal’s Rs 3.9 lakh crore, while the receipts came in at Rs 18.3 lakh crore.

The government spent a total of Rs 28.2 lakh crore in the first nine months, an increase from Rs 25.2 lakh crore in the same period last year.

A Rs 5.6 lakh crore April to December revenue gap was reported from last fiscal’s Rs 3.9 lakh crore.

The Central government is targeting a Rs 16.61 lakh crore fiscal deficit for the present fiscal year, which is 6.4 percent of the GDP.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Budget 2023 | Govt may cut food, fertiliser, fuel subsidies next fiscal

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Narendra Modi government is planning to cut spending on food, fertiliser, and fuel subsidies to rein in the fiscal deficit in the upcoming Union Budget 2023.

According to Union Finance Ministry data, the government’s fiscal deficit in end-November touched 59 percent of the full-year budget estimate on increased capital expenditure and slow growth in non-tax revenue.

Food subsidy

The government is planning to discontinue the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) as the total cost of the free foodgrain scheme since its launch till December 2022 is set to be Rs 3.91 lakh crore.

Also Read: Indian economy remains resilient in hostile global environment, says RBI governor

The government expects to budget around Rs 2.3 lakh crore for food subsidies in the coming fiscal year, compared with Rs 2.7 lakh crore for the current year to March 31.

Fertiliser subsidy

For the current financial year, the fertiliser subsidy bill is about Rs 2.2 lakh crore, higher than the budget estimate of Rs 1.05 lakh crore. According to reports, fertiliser subsidies for the coming fiscal is likely about Rs 1.2-1.5 lakh crore.

The reduction in fertiliser subsidies is also driven by expectations of lower crude oil prices and the government’s revised gas procurement policy for fertiliser companies. Food and fertiliser subsidies alone account for about one-eighth of India’s total budget spending of Rs 39.45 lakh crore this fiscal year.

Due to the reduction in the price of natural gas and raw materials, the government is also likely to reduce the LPG subsidy.

Fiscal 2021-22 

In its revised budget estimate for the 2021-22 fiscal, the government pegged total subsidies at Rs 4,33,108 crore against the actual budget estimate of Rs 7,07,707 crore in the previous financial year.

Also Read: Budget 2023 likely to target middle class, gig economy and creating jobs in urban areas

Out of this, the food subsidy is estimated to increase to Rs 2,86,469 crore in the current fiscal from Rs 5,41,330 crore in the 2020-21 fiscal, while petroleum subsidy is estimated to decline to Rs 6,517 crore from Rs 38,455 crore in the said period.

However, fertiliser subsidy is estimated to increase to Rs 1,40,122 crore during the ongoing fiscal from Rs 1,27,922 crore in the previous fiscal.

Fiscal 2022-23 

For the 2022-23 fiscal, the government said total subsidies are estimated to further decline to Rs 3,17,866 crore from Rs 4,33,108 crore in the current fiscal.

Out of this, fertiliser subsidy is estimated to decline by 25 percent to Rs 1,05,222 crore during the 2022-23 fiscal from Rs 1,40,122 crore in 2021-22, while food subsidy is estimated to decline by 28 percent to Rs 2,06,831 crore from Rs 2,86,469 crore in the said period.

Petroleum subsidies are estimated to decline by 11 percent to Rs 5,813 crore during the 2022-23 fiscal as against Rs 6,517 crore in the current fiscal.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Budget 2023 | Economists evaluate importance of fiscal consolidation and role of infrastructure spending

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Santanu Sengupta, India Economist at Goldman Sachs, and Samiran Chakraborty, Chief Economist-India at Citi, both agreed on the importance of fiscal consolidation and the role of infrastructure spending in the Indian economy. They also highlighted the potential impact of structural changes and the growth of the formal sector on tax revenue.

Sengupta also said he thinks the RBI will have more degree of freedom by December and won’t be thinking about a cash reserve ratio (CRR) cut. He also spoke about how, every year before the general elections, the government re-allocates expenses towards infrastructure, and it is important for the Centre continue with capital expenditure.

In an interview with CNBC-TV18, Sengupta and Chakraborty discussed at length what top economists are expecting in terms of income, expenditure and fiscal deficit as the income growth of the government would depend on the economy’s GDP growth.

According to Street estimates, India’s nominal GDP should grow by 10 percent in FY24 versus 15.4 this fiscal. The net tax revenue of the government is expected to grow at the same pace as the nominal GDP — 10-10.5 percent. On the expenditure side, two items are being watched — subsidy is seen falling from about Rs 5.7 trillion to Rs 4 trillion as free food amounts and fertiliser prices are likely to fall. Capital expenditure which was budgeted to grow by 25 percent this year; the Street expects it would be budgeted to grow by a slightly slower, maybe 15 percent next year that is from Rs 7.5 trillion that the government spends this year to Rs 8.7 trillion next year.

Also Read | Budget 2023 | Mutual fund industry body seeks tax parity on intra-scheme switching of units

Economists also want the fiscal deficit to come down to 5.8 percent from 6.4 percent this year. The Centre is expected to borrow a net Rs 11.6 trillion marginally above what it borrowed in the current year.

Sengupta also said he expects the fiscal deficit to consolidate to 5.9 percent, fully funded by subsidy reduction, showing the right optics of sticking to medium-term fiscal consolidation path on fiscal deficit.

“Our expectation is that we consolidate by 50 basis points to 5.9 percent of GDP from 6.4 in FY23, fully funded by the subsidy reduction. If you want to get to the medium-term fiscal consolidation path, so you want to get to about 4.5 percent in roughly 3-year’ time, then it’s important to show at least the optics of getting around that 6 percent number,” said Sengupta.

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Similarly, Chakraborty also emphasised the importance of fiscal consolidation. He stated that there are a few structural changes taking place supporting a larger borrowing programme, however, banks seem to be holding on to a higher statutory liquidity ratio (SLR). Chakraborty also pointed that there could be some steps which could result in a more populist looking Budget. He believes that the commitment to fiscal consolidation is important, and the net borrowing number will be looked at closely.

“For me, I would rather look at the extent of fiscal consolidation in this Budget. According to us, the fiscal impulse has been very strong over the last few years. Now is the time, in a cyclically adjusted way, to adjust for this fiscal impulse to be lower. Otherwise, there is a risk of current account deficit and inflation flaring up at the back end of the year, which in our view, is the more disturbing pre-election backdrop than a slightly slower growth,” he said.

Chakraborty also highlighted that the formal sector has grown faster than the nominal GDP aiding tax growth and better tax compliance could be aiding tax revenue. He also stated that the informal economy could pick-up from COVID-19 lows.

Also Read | Budget 2023 | Defence sector expects mega boost in this year’s allocation

For the entire discussion, watch the accompanying video

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Indian states’ finances improve, gross fiscal deficit expected to decline in 2022-23: RBI

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Reserve Bank of India (RBI) on Monday, January 16, said that the finances of Indian states are projected to improve in 2022-23 with the consolidated gross fiscal deficit to gross domestic product ratio seen falling to 3.4 percent from 4.1 percent for the previous year.

The central bank in its annual State Finances Report stated, “the fiscal health of the states has improved from a sharp pandemic-induced deterioration in 2020-21 on the back of a broad-based economic recovery and resulting high revenue collections.”

During the pandemic years, states’ finances were under pressure due to rising expenditures and limited revenue growth.

Also read: SBI’s loan EMI set to rise as lender hikes MCLR by 10 bps — Check latest interest rates

The debt of the States is expected to ease from 31.1 percent of GDP in 2020–21 to 29.5 percent in 2022–23, although it is still more than the 20 percent suggested by the Fiscal Responsibility and Budget Management Review Committee in 2018, which the RBI stated justifies giving debt consolidation priority.

The central bank also advised governments to set up a fund for longer-term expenditure when revenue collection is strong.

“It is worthwhile considering creating a capex buffer fund during good times…to smoothen and maintain expenditure quality and flows through the economic cycle,” the central bank added.

States are boosting current expenditures, such as that wages, interest payments, and subsidies, at a faster rate in the current fiscal year than they are spending on longer-term infrastructure projects.

Also read: RBI on right path on inflation targeting, don’t see need to change, says Governor Shaktikanta Das

Despite a significant increase in federal government capital expenditures, which has an impact on economic growth, the report found that state capital spending expanded by just 0.9 percent from April to October of the previous year.

The RBI stated that states may not meet their capital expenditure goals for the entire fiscal year but are still expected to have accelerated such spending in the second half. “This low capital outlay partly reflects the tendency to back-load expenditure in the latter half of the year,” it added.

It also stated that more funding for fields like health, education, infrastructure, and the switch to renewable energy can assist enhance productive capacity in the future. It is prudent to think about setting up a capex buffer fund while revenue flows are robust, the RBI informed.

Also read: Lower-than-expected inflation in December dims RBI rate hike fears

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Union Budget 2023: Concerns remain on the economic front, says former RBI governor YV Reddy

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Concerns remain on the economic front even as Prime Minister Narendra Modi leads India in doing a commendable job, feels former Reserve Bank of India Governor YV Reddy.

In a brief interview with CNBC TV18’s Latha Venkatesh, Reddy outlined the concerns India should have going into the Budget 2023.

– – – –

Reddy: ….you have to make a distinction – India and its people; what is the wealth of India and what is the income of people. So, if you recognise people’s wealth for India, not just India by itself and then view it together and you have to say this is what India stands for. If you have to say India is growing very fast, then you should say but the per capita income of Bangladesh is growing faster. So, we should constantly, at least the readers and everybody else, should constantly keep in mind that things may have to be, more than what you see in the newspaper. I think certainly short-term is very bad because of two situations. One is we are not very well integrated in the globe and second, we ourselves are not very much into any ideological position either politically or economically. We are just somewhere in the middle. So that ambiguous position of non-commitment to any particular ideology, we are taking advantage and I must compliment the Prime Minister for taking advantage of this particular neutral position; the uncommitted country is giving a lot of duties now.

Latha: Even geopolitically.

A: Yes. So that is why I would say that people will have to be far more careful than what they are now about the Indian economy and the society also.

Also Read | Former RBI Governor YV Reddy says India at 75 needs more domestic savings and investment

Q: But we do have twin deficits. Now a budget (Union budget) will come up in less than a month. Do you think fiscal deficit should be a worry, we ran up a deficit because of COVID. Should that be a very important consideration considering that this year we will end with a near 3 percent current account deficit also.

A: First let me start with current account deficit. Current account deficit influences the medium-term view because the current account deficit determines the exchange market, exchange market is determined by capital account, capital account transaction. So current account deficit may not be built into day-to-day movement; current account deficit will be on structural and the effectiveness of current account deficit in transmission to exchange is diluted.

Therefore, the situation is that current account should be a worry when people assess our fundamentals but not for market volatility. For that I have to look at capital flows. And in the capital flows also, we have slight problem also because our reserves have been built out of borrowing and more important the debt portion, particularly the government portion, is increasing large now. So, the composition of capital flows requires a careful voice before we attract any more, but now we are not in danger as far as current account deficit is concerned.

And then you come to the fiscal deficit; if the current account deficit is not an immediate problem, fiscal deficit is also not an immediate problem because most of it is funded and domestically biased and institutional prescription.

And finally, household savings are high. This is a redeeming feature, which already existed, and which will continue to exist. But there is a problem still and the problem is that if you stretch it too far then it could breakdown. So, we must very carefully not stretch it too far.

So, I would not say to worry about fiscal deficit but certainly worry about the central government because people look at central government — macro analyst may prepare – markets do not look at totality of the deficit; they are concerned about government of India — direct and indirect.

For more details, watch the accompanying video.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

India’s fiscal deficit touches 59% of full-year estimate in 8 months

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India’s fiscal deficit for the eight months through November touched Rs 9.78 lakh crore, or 59 percent of annual estimates, as per data released by the Controller General of Accounts (CGA) on Friday, December 30.

In the corresponding period last year, the deficit was 46.2 percent of the Budget estimates for 2021-22.

The net tax revenue at Rs 12.24 lakh crore was 63.3 percent of BE 2022-23. During the corresponding period of 2021-22, the net tax revenue was 73.5 percent of that year’s BE.

#Government: April-November #capex at Rs 4.47 tn Vs Rs 2.74 tn (YoY)

⭕️April-November #receipts at Rs 14.65 tn Vs Rs 13.79 tn (YoY)

⭕️April-November #revenue gap at Rs 5.73 tn Vs Rs 4.43 tn (YoY)

Here’s more👇 pic.twitter.com/yLTA1Ra5vd

— CNBC-TV18 (@CNBCTV18Live) December 30, 2022

Non-tax revenue was at Rs 1.98 lakh crore or 73.5 percent of BE. In the last fiscal, the collection was 91.8 percent of BE.

Also read: Current account deficit swells to 9-year high of $36.4 billion in Q2

The central government’s total expenditure from April-November works out to be 61.9 percent of BE 2022-23, higher than 59.6 percent of BE in the year-ago period. Capital expenditure was at Rs 4.47 lakh crore or 59.6 percent of BE between April-November. In the last fiscal, capex was 49.4 percent of BE.

As per the CGA data, the central government’s total receipts, including non-tax revenue, stood at Rs 14.64 lakh crore or 64 percent of the current year’s BE. In the year-ago period, the total receipts had touched 69.8 percent of BE 2021-22.

For 2022-23, the fiscal deficit of the government is estimated to be Rs 16.61 lakh crore or 6.4 percent of the GDP.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

India’s April-October fiscal deficit widens to 45.6% of full-year target

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The fiscal deficit of India for April-October touched 45.6 percent, or Rs 7.58 lakh crore of the full-year budget estimate, as per the official data released on Wednesday.  In the corresponding period last year, the deficit was 36.3 percent of the budget estimates for FY 2021-22.

A fiscal deficit is a difference between expenditure and revenue. According to the data published by the Controller General of Accounts (CGA), it was Rs 7,58,137 crore during the April-October period of FY 2022-23.

The Centre is targeting a fiscal deficit of Rs 16.61 lakh crore or 6.4 percent of the GDP, for FY 2022-23.

As per the data, total receipts stood at 13.86 lakh crore rupees, while the total expenditure in April-October was at Rs 21.44 lakh crore. They were 60.7 percent and 54.3 percent of this fiscal year’s budget target.

Also Read: India’s April-September fiscal deficit of FY23 touches 37.3% of full-year target

Revenue receipts stood at 13.50 lakh crore rupees, of which tax revenue was 11.71 lakh crore rupees and non-tax revenue was 1.79 lakh crore rupees.

In the period of April-September, the fiscal deficit stood at 37.3 percent of the full-year target. It had widened to touch Rs 6.20 lakh crore.

In February this year, union finance minister Nirmala Sitharaman, while presenting the budget for 2022-23 set the fiscal deficit target at 6.4 percent of GDP for FY23 starting April, compared to 6.7 percent in the previous financial year.

But with more than half the financial year over already, the fiscal deficit remains under 50 percent of the Budget target for the full year.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

India’s April-September fiscal deficit of FY23 touches 37.3% of full-year target

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The central government’s fiscal deficit in the first half of the current financial year works out to be 37.3 percent of the full-year target, according to official data released on Monday.

In actual terms, the fiscal deficit — the difference between expenditure and revenue — was Rs 6,19,849 crore during the April-September period of 2022-23.

It was 35 percent of Budget Estimates (BE) in the corresponding period last fiscal.

Also read: Eight core sector industries’ output grows 7.9% in September

As per the data released by the Controller General of Accounts (CGA), the government’s total receipts, including taxes, stood at Rs 12.03 lakh crore or 52.7 percent of BE for 2022-23.

During the year-ago period, the collection was 55.6 percent of BE 2021-22.

The tax revenue stood at about Rs 10.11 lakh crore or 52.3 percent of this year’s BE.

The central government’s total expenditure was Rs 18.23 lakh crore or 46.2 percent of the BE 2022-23. It was 46.7 percent of BE 2021-22.

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For 2022-23, the fiscal deficit of the government is estimated to be Rs 16.61 lakh crore or 6.4 percent of the GDP.

According to the data, capital expenditure was 45.7 percent of the full-year budget target in the current fiscal, compared to 41.4 percent in the corresponding period last year, as per the monthly account of the union government up to September.

Out of the total revenue expenditure, Rs 4.36 lakh crore was on account of interest payments and Rs 1.98 lakh crore on account of major subsidies.

Also read: RBI inflation meeting on Nov 3 — Economists don’t expect rate action

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3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Government to rationalise expenditure to maintain 6.4% fiscal deficit target

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Indian government is walking a tight fiscal rope as buoyant tax receipts may not be enough to cover the additional expenditure and the non-tax revenue gap in the ongoing fiscal.

At the moment, the finance ministry holding the budgetary exercise meeting for the 2023-24 fiscal, and there are demands coming in the revised estimates (RE) —some have been less than the first half of the current fiscal — stack up to around Rs 3 lakh crore-odd.

Plus there could be a bit of on the non-tax revenue side, as there are currently no clear estimates of what the RBI dividend could look like, and there is going to be a gap on the disinvestment side as well. So, that coupled with the additional expenditure, is something that the government is grappling with.

Tax revenues have been more than buoyant, both direct and indirect. Direct taxes may actually grow by around 30 percent odd in the ongoing fiscal. But the current sentiment within the government is that this may not be sufficient to maintain the fiscal deficit at 6.4 percent, and so, some kind of ‘rationalisation’ in expenditure is very likely.

They will not touch the big expenditure ticket items like MNREGA, food subsisdies, fertilisers as all of those are strict commitments. But there could be some revisions in the smaller schemes and smaller demands from smaller ministries and departments. We will only know for sure as those numbers will be out in next year’s Union Budget. But all of this is part of the ongoing budgetary exercise.

From next year onwards, up to the 2025-26 financial year, the government has to reduce the fiscal deficit to below 4.5 percent, which is going to be a challenge because then the reduction will have to be more than 50 basis points every year, which means maintaining it at 6.4 percent this year becomes very important.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow