Govt breaches 2017-18 fiscal deficit target in November
The breaching of fiscal deficit target signals that it may fail to achieve the fiscal deficit target of 3.2% of GDP for the year.business Updated: Dec 29, 2017 14:55 IST
The government breached its fiscal deficit target for the current fiscal year ending March, 2018, in November itself due to lower than expected revenue collections and higher revenue expenditure, giving clear signals that it may fail to achieve the fiscal deficit target of 3.2% of GDP for the year.
Data released by the Controller General of Accounts (CGA) showed during April to November period, government’s fiscal deficit was 112% of its Rs 5.5 trillion target for the current fiscal year 2017-18.
During April-November period, revenue deficit also stood at 152% of the Rs 3.2 trillion full year target signalling that government may also miss the revenue deficit target of 1.9% of GDP for 2017-18. During the same period last year, revenue deficit was 98.2% of the full year target.
The finance ministry on Wednesday announced that it will borrow Rs 50,000 more long term funds through government securities which analysts said may raise the fiscal deficit by 30 basis points to 3.5% of GDP for 2017-18.
This may also force finance minister Arun Jaitley to recalibrate his fiscal consolidation roadmap of achieving a fiscal deficit of 3% of GDP by 2018-19.
The finance ministry, however, said in a statement that the government will not be raising any net additional borrowing “between now and March 2018” as it plans to trim its short-term borrowing programme.
GST receipts have been a cause for concern. Total GST collection, including taxes on inter-state supplies and the cess on certain items, added up to Rs 80,808 crore in December. This was a 14% drop from receipts in August, the first month of tax collection and return filing under the new indirect tax system that kicked in on 1 July. However, tax revenue collections are only marginally down in April-November period at 57% of the full year target from 58.9% during the same period a year ago.
The government has so far managed to raise about three-fourths of the targeted Rs72,000 crore through disinvestment, according to information available from the finance ministry.
Non-tax revenue including dividends from public sector banks and the Reserve Bank of India is only 36.5% of the full year target during April-November period against 54.2% during the same period last year. The RBI has transferred Rs 30,659 crore as a dividend to the government, less than half the surplus it transferred the previous year, causing much of the drop in non-tax revenue.