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Updated January 1st, 2024 at 09:39 IST

Will govt meet the fiscal deficit target in FY24?

The Reserve Bank of India also signalled confidence in attaining the fiscal deficit target of 5.9 per cent of the GDP.

October sees 45% fiscal deficit
October sees 45% fiscal deficit | Image:Shutterstock
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Indian economy is booming, and the macroeconomic fundamentals are robust. 2024 is a crucial year from an Indian perspective- the interim budget, general elections, and US elections are going to have a big impact on the economy.  But all economy watchers are keenly watching to see how the government performs on the fiscal consolidation front.  

As per report by Motilal Oswal, with better-than-expected receipts, the center could meet higher spending needs and achieve its fiscal deficit target of 5.9 per cent of GDP in FY24. For FY25, however, core fiscal spending growth will need to be at a 13-year low of <7.0 per cent YoY (vs. an expected ~15 per cent YoY growth in FY24) to achieve a fiscal deficit of 5.2 per cent of GDP, 

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The Reserve Bank of India also signalled confidence in attaining the fiscal deficit target of 5.9 per cent of the GDP. “This is attributable to the Centre’s tax revenue that has been growing at a robust pace apart from the more than anticipated collections on the non-tax front,” the RBI said in the study on Wednesday.

On the other hand, the net market borrowings of the states during the first half of 2023-2024 witnessed a year-on-year decline of 23.1 per cent and accounted for only 24.8 per cent of their BE against 33.7 per cent of the first half of 2022-2023, the RBI said.

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The fiscal deficit for the government reached 45 per cent of the annual target in October, totalling Rs 8.03 lakh crore for the April-October 2023-24 period, as per data released by the Controller General of Accounts (CGA). 

In comparison, during the same period in the previous year, the deficit was slightly higher at 45.6 per cent of the 2022-23 budget estimates. The government's fiscal deficit target for the full year is Rs 17.86 lakh crore or 5.9 per cent of the GDP.

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Up to October 2023, the government received Rs 15.9 lakh crore, representing 58.6 per cent of the corresponding Budget Estimate (BE) for 2023-24. This includes Rs 13.01 lakh crore from net tax revenue, Rs 2.65 lakh crore from non-tax revenue, and Rs 22,990 crore from non-debt capital receipts, comprising recovery of loans and miscellaneous capital receipts.

The fiscal deficit at the end of November stood at Rs 9.06 lakh crore or 50.7 per cent of the full-year budget estimate, according to data released by the Controller General of Accounts (CGA) on Friday. In absolute terms, the fiscal deficit was at Rs 9,06,584 crore during the April-October period of 2023-24.

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In the same period last year, the deficit was at 58.9 per cent of the budget estimates of 2022-23. For 2023-24, the fiscal deficit of the government is estimated to be at Rs 17.86 lakh crore or 5.9 per cent of the GDP.

The Government of India received Rs 17.4 lakh crore (64.3 per cent of corresponding BE 2023-24 of total receipts) up to November 2023 comprising Rs 14.35 lakh crore tax revenue (net), Rs 2.84 lakh crore of non-tax revenue and Rs 25,463 crore of non-debt capital receipts.

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Non-debt capital receipts consist of recovery of loans and miscellaneous capital receipts.

As per the CGA data, total expenditure incurred by the central government was at Rs 26.52 lakh crore (58.9 per cent of corresponding BE 2023-24) during April-November 2023.

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Out of the total expenditure, Rs 20.66 lakh crore was in the revenue account and Rs 5.85 lakh crore was in the capital account.

Continuing the path of fiscal consolidation, the government intends to bring the fiscal deficit below 4.5 per cent of GDP by 2025-26. 

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Published December 31st, 2023 at 13:00 IST

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