India’s April-July fiscal deficit reaches 21.3% of FY22 target

New Delhi (IANS)┬áIndia’s April-July budgetary fiscal deficit reached 21.3 per cent of the FY22 target, official data showed on Tuesday.

The fiscal deficit — the difference between revenue and expenditure — for the April-June 2021-22 period stood at Rs 321,143 crore, or 21.3 per cent of the budget estimates (BE).

The FY22 deficit has been pegged at Rs 15.06 lakh crore.

Besides, the CGA data showed that the fiscal deficit during the corresponding months of the previous fiscal was 103.1 per cent of that year’s target.

The Central government’s total expenditure stood at Rs 1,004,440 crore (28.8 per cent of BE) while total receipts were Rs 683,297 crore (34.6 per cent of BE).

“With a healthy rise in receipts amid a discouraging decline in total spending driven by the non-interest non-subsidy component of revenue expenditure, the government of India’s fiscal deficit printed at a modest Rs 3.2 trillion in April-July 2021, relative to the year-ago level of Rs 8.2 trillion recorded amid the first wave of Covid-19, as well as the pre-Covid level of Rs 5.5 trillion,” said Aditi Nayar, Chief Economist, ICRA.

“We expect the benign, albeit lacklustre, fiscal print to prolong the softening in G-sec yields seen after the Fed delinked the timeline for tapering from that for rate hikes. As expected, a normalising base has pulled down the YoY growth in tax revenues to 49 per cent in the month of July 2021 from 97 per cent in Q1 FY2022, although the pace of expansion remains rather promising,” Nayar added.

According to Devendra Kumar Pant, Chief Economist, India Ratings & Research: “Gross tax revenue collection performance in FY22 until July 2021 has remained strong. While weak performance of FY21 contributed towards higher growth rate.

“Sharp increase in revenue and contractionary non-interest revenue expenditure has resulted in fiscal deficit at end-July 2021 at INR 3,211.43 billion, lowest in last nine years. India Ratings expects FY22 fiscal deficit to be lower than the budget estimate at 6.6 per cent of GDP.”

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