India's fiscal deficit at 27% of annual estimate after five months

India's fiscal deficit for the first five months of the financial year through August stood at Rs 4.35 lakh crore, or 27% of the government's annual target. According to official data, the deficit narrowed from 36% recorded in the same period last year, reflecting the government's efforts to rein in public spending and boost revenue collection.
According to estimates, total receipts during the April- August period amounted to Rs12.17 lakh crore, while expenditure stood at Rs16.52 lakh crore. These figures represent 38% and 34.3%, respectively, of the full-year budget estimates. In comparison, during the same period last fiscal year, receipts were at 37.9% of the budget estimate, and expenditure was at 37.1%, showing a slight tightening of public finances.
Tax revenues reached 33.8% of the annual budget estimate, marginally lower than the 34.5% seen in the previous fiscal year. Non-tax revenue was 61.3% of the full-year estimate, down from 69.5% in the comparable year-earlier period.
A significant boost to government receipts came from the Reserve Bank of India (RBI), which transferred Rs 2.11 lakh crore to the central government as a dividend, stated report. This amount is more than double the Rs1 lakh crore budgeted from the RBI and state-run banks, helping to ease fiscal pressures.The revenue deficit, which indicates the gap between the government's revenue receipts and its spending, stood at Rs1.43 lakh crore, or 24.7% of the annual target.
During the Union Budget presentation for this fiscal year, Union Finance Minister Nirmala Sitharaman set a fiscal deficit target of 4.9%, revising down the earlier estimate of 5.1%. The government also reiterated its commitment to fiscal consolidation, aiming for a 5.1% deficit for the next fiscal year, according to information.
On the expenditure front, the government spent Rs1.79 lakh crore on major subsidies, including food, fertilizers, and petroleum, amounting to 47% of the annual allocation. This is slightly lower than the 48% of budgeted spending for subsidies in the same period last year, highlighting a marginal reduction in subsidy disbursement.
Despite ongoing demands from coalition partners for increased funding and calls from the middle class for more tax relief, the government has remained committed to fiscal discipline, demonstrating a focus on balancing growth with financial responsibility, experts remarked.

(Writer is a Finance Research Analyst, based in Gandhinagar, Gujarat)