Better receipts may help govt to meet higher fiscal deficit target: Motilal Oswal

With better-than-expected receipts, the centre 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, brokerage firm Motilal Oswal said. 

The Reserve Bank of India also signalled the confidence of 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 first half of 2022-2023, the RBI said.

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.

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.