India’s fiscal deficit reaches 96 per cent of FY18 budget estimate in August

In what can come as a major roadblock in the govt’s short term plan to significantly raise capital spending to boost the economy, data released by the Controller General of Accounts (CGA) shows that it has surpassed its revenue deficit target and exhausted 96.1 per cent of its full-year fiscal deficit target in the first five months (April-August).

During the same period a year earlier, the government had used up 76.4 per cent of the total fiscal deficit target for 2016-17. As for the revenue deficit, last year the government reached 91.7% of its target in the first five months, whereas it is at 134% this year.

During the April-August period, total expenditure was 44.3 per cent of the full-year target of Rs21.5 trillion, against 40.5% during the same period in the previous fiscal year.

While revenue expenditure is at a higher level this year—45.8% of the full-year target till August, as against 41% during the same period last year—capital expenditure so far has fallen short at 35.5% during the April-August period compared to 37% during the same period last year.

The Union finance ministry had advanced the budget presentation by a month to 1 February this year, instead of the usual practice of presenting it on the last working day of February, in order to initiate revenue mobilization and capital expenditure measures right from the beginning of the new fiscal year.