The second Narendra Modi government is far removed from the fiscal deficit target set in the Budget presented in Parliament in the current fiscal year of Rs 7.03 trillion, which is 3.3% of the GDP. At the end of September, the Union government’s fiscal deficit stands at Rs 6.52 trillion. The datum is part of the statistics of the Controller General of Audit (CGA) released Thursday.
Though the cost to the exchequer varied, the income did not come as expected, with the government of India set to miss the deficit target even on the annual basis as the gap is huge. In the first six months of the current financial year, the deficit is already 93% of what it had budgeted for, which means it is not left with the scope of spending generously. It should be noted that the financial year in India starts 1 April and 3 March happens to be the last day of a fiscal year.
According to government statistics, as of 30 September, the central government’s fiscal deficit or the difference between its expenditure and income was about Rs 6,51,554 crore. However, the deficit stood at 95.3% of the 2018-19 Budget estimate in the same month last year, as per the data released by the CAG.
In September, the central government had announced a corporate tax exemption to strengthen the economy. As a result of this decision, the government earned less than Rs 1.45 trillion worth of revenue. Experts say that the theory that ‘lower taxes lead to higher collections’ takes time to realise and there is no reason for panic. However, they point out in the same vein that the Modi government’s welfare schemes, despite the DBT, drains the treasury excessively and that the political masters of the economy must soon devise ways to make the classes that are being empowered self-sufficient.
Data from the CAG say that in the April-September half of the fiscal year 2019-20, the government has been able to earn through revenue collections just 41.6% of what was budgeted. During the previous financial year, the government’s actual revenue collection was 40.1% of the target.
The government had set a target of earning $ 19.62 trillion in the current financial year. At the end of September, the revenue it could collect amounts to Rs 8,16,467 crore.
On the other hand, the Centre had budgeted a target of spending Rs 27.86 trillion for the entire financial year. But at the end of September, the government’s spending stood at Rs 14.88 trillion.
In the era of Arun Jaitley, however, the fiscal deficit for the current fiscal was 3.4% for the current fiscal as of 1 February this year when ad hoc finance minister Piyush Goyal had presented the Budget. For 2019-20, the government too retains the fiscal deficit at 3.4% of the GDP.