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Updated December 20th, 2023 at 20:15 IST

Fiscal position of Centre and States remained resilient during H1 of FY24: RBI

According to the apex bank, the Centre aimed for a feasible order of fiscal consolidation for 2023-24, in line with the medium term gross fiscal deficit (GFD).

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The fiscal position of the Centre and States remained resilient during the first half of 2023-24, furthermore, the government has curtailed its revenue expenditure, prioritising capital spending to enhance the overall quality of government expenditure, the Reserve Bank of India said.  “Their receipts were broadly in line with budget estimates and the containment of revenue expenditure while preserving capital expenditure demonstrated commitment to prudent fiscal management. The improvement in the quality of government expenditure bodes well for medium-term growth prospects and fiscal consolidation,” the apex bank said. 

According to the apex bank, the Centre aimed for a feasible order of fiscal consolidation for 2023-24, in line with the medium term gross fiscal deficit (GFD) target of 4.5 per cent of the GDP by 2025-26. The States too have endeavoured for fiscal consolidation in 2023-24, budgeting a consolidated GFD of 3.1 per cent of the GDP, down from 3.4 per cent in 2022-23 (RE).

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“The government finances for the Centre and States, as evident from the half yearly review for the financial year 2023-24 (H1:2023-24) was robust, notwithstanding the prevailing geo-political tensions as well as the elevated likelihood of a recession in several advanced economies,” the RBI said in its report.  “The Centre’s major direct and indirect tax heads such as income tax, corporation tax, and goods and services tax (GST) recorded impressive growth in H1:2023-24,” it said. The apex bank also mentioned that on the expenditure side, the Centre has ensured front-loading of its capital expenditure which would catalyse economic recovery from the scars left behind by the pandemic. 

“The Centre has successfully contained its revenue expenditure to below 50 per cent of the BE for 2023-24 in H1 of 2023- 24. States’ tax revenues remained buoyant during H1:2023-24, with a noticeable increase in their own tax revenue (OTR),” the report stated.

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Published December 20th, 2023 at 20:15 IST

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