The Centre’s fiscal deficit touched Rs 5.1 lakh crore or 93.9% of the target for the full financial year in April-November against 80.4% in the same period a year ago, increasing the chances of a much fiercer crackdown than last year on expenditure in the remaining months of the year, besides an aggressive bid to milk public sector units by way of higher/special dividends.
Terming the FY14 fiscal deficit target of 4.8% of GDP as a red line, the government has asserted that it would not be breached under any circumstances.
Official data on Monday showed April-November revenue receipts stood at the same level as the year-ago period in relation to the respective budget targets at 47.6%. As for expenditure, 61.3% of the amount budgeted for FY14 was spent by November, about 4 percentage points higher than the corresponding figure for the year-ago period.
Between October and March last year, the Centre forced a R1-lakh-crore contraction in expenditure to rein in the FY13 fiscal deficit to a creditable 4.9% of the GDP.
This was against a 6.4% many had predicted even by the middle of that year. Budget FY14 estimated nominal GDP growth at 13.4% and, based on that, projected a total expenditure of Rs 16.65 lakh crore and revenue of Rs 10.56 lakh crore, aided by a strong growth in net tax receipts to Rs 8.84 lakh crore.
According to the latest Controller General Accounts (CGA) data, the Centre's net tax revenue stood at Rs 3.96 lakh crore in April-November, which is 44.8% of the full-year target of Rs 8.84 lakh crore. While this was worse than last year, non-tax revenue receipts in the period stood at 61.8% of the FY14 budget target at Rs 1.07 lakh crore, helped by higher PSU dividends and receipts of user charges and licence fees from telecom companies. The dismal PSU disinvestment scenario has kept “non-debt capital receipts” in April-November at just Rs 8,947crore (13.5%), against the full-year target of Rs 66,468 crore.
To give a fillip to the economy, expenditure was significantly front-loaded this fiscal (which explains both Plan and non-Plan expenditure in April-November being much higher than last year in relation to the Budget targets at 52.4% and 65.8%, respectively) . Revenue shortfall could be as high as Rs 90,000 crore (Rs 70,000 crore in tax receipts and Rs 20,000 crore in disinvestment). So the finance ministry will have no option