Fiscal deficit improves to 6.7% in FY22 on higher tax mop up
Tax receipts stood at ₹18.2 lakh cr against the revised estimates of ₹17.65 lakh cr
NEW DELHI: The fiscal deficit for 2021-22 improved to 6.71% of the gross domestic product (GDP) over the revised budget estimate of 6.9% mainly because of higher tax realisation.
Unveiling the revenue-expenditure data of the Union government for 2020- 21, the Controller General of Accounts (CGA) said the fiscal deficit in the absolute terms was ₹15,86,537 crore (provisional). The finance ministry in February had estimated the deficit at ₹15,91,089 crore.
According to the data, the tax receipts during the fiscal were at ₹ 18.2 lakh crore as against the revised estimates (RE) of ₹17.65 lakh crore.
The total expenditure was also higher at ₹37.94 lakh crore against the RE of ₹ 37.7 lakh crore presented to Parliament on February 1, 2021. The CGA further said the revenue deficit at the end of the fiscal was 4.37% for fiscal 2021-22.
In another set of data, the CGA said the fiscal deficit during the first month of 2022-23 was 4.5% of the Budget Estimate for the current fiscal. The deficit was 5.2% in the year-ago period.
The government expects the fiscal deficit for the current financial year at 6.4% of GDP or ₹16.61 lakh crore.
In April 2022, there was a revenue surplus of ₹591 crore. The government meets its fiscal deficit from market borrowings. Commenting on the data, Vivek Jalan, partner, Tax Connect Advisory, said the revenue collections were around ₹27 lakh crore, almost ₹ 5 lakh crore above the budget estimates of around ₹ 22 lakh crore.
There was a growth of around 35% over the last year’s revenue collection, led by growth of around 50% indirect taxes and supported by around 20% growth in indirect taxes, he said.
“The spurt in tax revenues, especially GST collection was mainly a result of DGARM, which is the Data Analytics wing of the GST Council,” Jalan said.
Aditi Nayar, chief economist, ICRA said the provisional data indicates that the fiscal deficit of the Centre was contained marginally below the 2021-22 revised estimate, benefitting from the higher tax and nontax revenue receipts and lower capital spending, which absorbed the deficit in nondebt capital receipts and higher revenue expenditure.
On the outlook for 2022-23, she said there are several risks to the fiscal deficit target of ₹16.6 lakh crore for 2022-23, emanating from the revenue loss to the Centre on account of the excise duty cut, lower-thanbudgeted transfer of the Reserve Bank of India’s surplus, and the need for additional spending on food, fertilizer and LPG subsidies through the year.
For the last fiscal year, the government had initially pegged the fiscal deficit at 6.8% of the GDP in the budget presented in February 2021.
The government in the revised estimates in the Budget for 2022-23 forecast a higher fiscal deficit of 6.9% of the GDP or ₹15,91,089 crore for the fiscal ended in March.