India's Fiscal Deficit Surge to 70% of Estimate in April-July 2015 period

 

The NDA Government’s fiscal deficit has gone up to nearly 70 per cent of the Budget Estimate during first four months of the current fiscal year.

However, the good news is that the capital expenditure has increased significantly, which means more money can be spent on developmental activities.

According to latest data of Controller General of Accounts (CGA), fiscal deficit during April-July period exceeded ₹3.80 lakh crore out of the Budget estimate of over ₹5.55 lakh crore.

This deficit is mainly due to higher expenditure which is over 33 per cent in first four months of the current fiscal as against little over 28 per cent during corresponding period of previous fiscal.

However, the Plan expenditure touched nearly 34 per cent of the Budget estimate as against 23 per cent during previous fiscal. Of the Plan expenditure, capital expenditure was over 38 per cent of the Budget estimate (23 per cent). More capital expenditure will encourage private investment, which is expected to boost growth.

Revenue growth

Higher spending was possible due to good growth in revenue. While tax revenue reached around 16.7 per cent of the Budget estimate as against 15% during the previous fiscal, non-tax revenue showed much better growth with mobilisation of almost 25 % of the Budget estimate as against 13.5% during previous fiscal.

Aditi Nayar, Senior Economist with ICRA, said that fiscal deficit in the first four months of 2015-16 is a substantial 19 % larger than the corresponding figure for 2014-15.