April-July FY22: Centre reins in fiscal deficit at 21% of BE


The Centre’s net tax receipts rose 2.6 times on-year to Rs 5.29 lakh crore or 32.2% of FY22BE compared with a mere 12.4% of the corresponding target reported in the year ago period.

The Centre’s fiscal deficit in the first four months of this fiscal came in at only 21.3% of the full-year budget estimate (BE), the lowest in 11 years, thanks to curbs on expenditure and a rise in tax and non-tax revenue collection.
The fiscal deficit was 103.1% of the corresponding annual target in the April-July period of FY21.

Despite the announcement of the relief package in June, the fiscal cost of which is estimated at around Rs 1.5 lakh crore, the deficit target of 6.8% of GDP for FY22 would be met, given the possibility of revenue receipts exceeding the budget estimate and expenditure rationalisation, finance secretary TV Somanathan had told FE recently.

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Most departments were asked to contain spending in July-September at 20% of the BE against norm of 25%.
The data released by the Controller General of Accounts on Tuesday put the Centre’s fiscal deficit for April-July FY22 at Rs 3.21 lakh crore against the BE for 2021-22 of Rs 15.07 lakh crore.

The Centre’s non-tax receipts surged 4.7 times to Rs 1.39 lakh crore in April-July of FY22 thanks to the Reserve Bank of India’ surplus transfer of Rs 99,122 crore (for the last nine months of FY21), which was almost double the level government budgeted for. Non-tax receipts in the first four months of FY22 were 57.6% of the FY22BE compared with just 6.4% of the corresponding target achieved in the year ago pandemic-hit period a year ago.

The Centre’s net tax receipts rose 2.6 times on-year to Rs 5.29 lakh crore or 32.2% of FY22BE compared with a mere 12.4% of the corresponding target reported in the year ago period.

The Centre’s capital expenditure in April-July of FY22 stood at Rs 1.28 lakh crore or 23.2% of the target as against 27.1% of the relevant target achieved in the year ago period.

Capital expenditure has slowed down during the first four months as it grew by 15% against the required rate of 30% to achieve the full year target of Rs 5.54 lakh crore in FY22. Capex declined 39% on year to Rs 16,932 crore in July 2021.

Total expenditure in the first four months of the current financial year stood at Rs 10.04 lakh crore or 28.8% of the full year target compared with 34.7% of the target, achieved in the year ago period.

Gross tax revenue grew 83% on-year in April-July, aided by corporation tax (y-o-y up 171.5%), custom (144%), central GST (78%) and income tax (77%).

While net tax revenue growth of 161% in April-July of FY22 was boosted by low base of FY21, the collections were even higher by 56% compared with the pre-pandemic April-July of FY20.

“This is possible due to —growth in FY22 turning positive compared to negative growth in FY21 and higher inflation (April-July 2021 WPI growth: 11.8%, April-July 2020 WPI growth: -1.8%). Tax collections in FY22 has been benefitted by sharp real GDP growth (mainly due to low base of last year) and inflation tax,” said India Ratings chief economist DK Pant.



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