The fiscal deficit of the Indian government has reached 25.3% of the full-year target at the end of June 2023, as per data released by the Controller General of Accounts (CGA). This article provides an overview of the fiscal deficit situation in India, comparing it to previous years and the government’s projected targets for the current financial year (2023-24).
Definition and Significance of Fiscal Deficit:
Fiscal deficit is the gap between the government’s total expenditure and revenue. It indicates the extent to which the government needs to borrow to meet its expenses. A high fiscal deficit can have implications on inflation, interest rates, and overall economic stability.
Fiscal Deficit in 2022-23 and Projected Target for 2023-24:
In the previous financial year 2022-23, the fiscal deficit was recorded at 6.4% of the GDP, which was lower than the earlier estimate of 6.71%. For the current financial year 2023-24, the government aimed to further reduce the fiscal deficit to 5.9% of the GDP.
Current Fiscal Deficit Situation:
At the end of the first quarter (June 2023), the fiscal deficit stood at 25.3% of the full-year target. In absolute terms, this amounted to Rs 4,51,370 crore. This level of deficit is considerably higher compared to the same period in the previous financial year, where it was at 21.2% of the Budget Estimates (BE).
Net Tax Revenue Collection:
The net tax revenue collected by the government during the first three months of 2023-24 was Rs 4,33,620 crore, which accounted for 18.6% of the BE for the current fiscal year. In comparison, at the end of June 2022, the net tax revenue collection was higher at 26.1%.
Government Expenditure:
The central government’s total expenditure during the first quarter of 2023-24 was Rs 10.5 lakh crore, representing 23.3% of the BE. This expenditure level was slightly lower than the previous year’s corresponding period when it stood at 24% of the BE.
Breakdown of Expenditure:
Out of the total expenditure, Rs 7.72 lakh crore was spent on the revenue account, and Rs 2.78 lakh crore was allocated to the capital account. Significant components of revenue expenditure included Rs 2,43,705 crore on interest payments and Rs 87,035 crore on major subsidies.
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