The Centre’s fiscal deficit in the first eight months of the current financial year (April-November 2016) touched 85.8 per cent of the Budget Estimates for 2016-17, compared to 87 per cent at this point of time in the corresponding year-ago period. The improvement recorded this year is thanks to better tax receipts.
The government did not squeeze capital expenditure in November to compress fiscal deficit, which was the case a few months ago. Capital expenditure needs to be stepped up further as the economy came under the pressure of demonetization. In absolute terms, fiscal deficit touched the Rs 4.58 lakh crore mark during April-November 2016 against the Budget Estimate of Rs 5.34 lakh crore.
Tax receipts were Rs 6.21 lakh crore, constituting 58.9 per cent of the BE at Rs 10.54 lakh crore. This was higher than just 50.5 per cent in the year-ago period. On other heads, non-tax revenues were only 54.2 per cent of BE this time against 78.1 per cent in the first eight months of the previous financial year. Non-debt capital receipts were 48.5 per cent of BE, compared with 25.8 per cent in FY16.
Aditi Nayar, principal economist at ICRA, said: “The Government’s tax collections displayed a healthy growth in November 2016 on a small base. Disclosure of income under the Pradhan Mantri Garib Kalyan Yojana would support the government’s tax revenues in the remainder of the year, offsetting likely shortfalls in non-tax revenues and disinvestment receipts, and preventing a fiscal slippage.”