India’s Fiscal Deficit for FY23 Estimated at Rs 17.5 lakh crore, FY24 Rs 17.95 lakh crore: SBI

The upcoming Indian budget for 2023-24 will be a challenging one for the government to follow the roadmap for fiscal consolidation amidst a global environment of declining inflation, said a top economist of State Bank of India in a report. For India, this could make things difficult to set a nominal gross domestic product (GDP) number significantly higher than 10 per cent, with a deflator about 3.5 per cent. But this could also mean a higher GDP growth than anticipated at about 6.2 per cent.

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About Expenditure And Receipt of The Govt:

The fiscal deficit of the Indian government for FY23 will be about Rs.17.5 lakh crore. For FY23, total receipts of the Government would be higher than the budget estimates (BE) by around Rs 2.3 lakh crore, on account of higher direct tax receipts (about Rs 2.2 lakh crore), higher GST receipts (Rs 95,000 crore) but lower dividends (about Rs 40,000 crore), lower fuel tax net of cess (Rs 30,000 crore) and lower disinvestment receipts (about Rs 15000-20,000 crore).

Expenditure is likely to be on the higher side of the BE by around Rs 3 lakh crore on account of higher subsidy bill and additional spending announced by the Government. Taking this into account, the fiscal deficit of the Government in FY23 is expected to come at Rs 17.5 lakh crore. However, higher nominal GDP growth (15.4 per cent) estimates will help in keeping the fiscal deficit at 6.4 per cent of the GDP.

Future Budget Forecasts:

As regards FY24, the government’s expenditure is likely to increase by around 8.2 per cent over FY23 estimates to Rs 46 lakh crore. Subsidy bill which increased significantly in FY23 is estimated to be reduced in FY24 to around Rs 3.8-4 lakh crore and capital expenditure is expected to grow by 12 per cent.

Borrowings of the Govt:

As far as borrowing is concerned, net market borrowing of the Centre in FY24 will be around Rs. 11.7 lakh crore and with repayments of Rs 4.4 lakh crore, gross borrowing is expected at Rs 16.1 lakh crore. We believe a switch of about Rs 50,000 crore is also likely to be announced. In FY24, the overall gross borrowing by Centre and States is likely to be Rs 24.3 lakh crore (Rs. 22.2lakh crore in FY23) and net borrowings Rs. 17 lakh crore (Rs 16.7 lakh crore in FY23). We further believe that the Government will continue to rely on small saving schemes (Rs 5 lakh crore likely in FY24).

What Is Fiscal Deficit:

Fiscal Deficit is the difference between total revenue and total expenditure of the government. The fiscal balance of a country is calculated by its government’s revenue followed by its expenditure in the provided financial year, the situation where the government expenses increase more than the revenue in a year is a fiscal deficit.

Current Fiscal Deficit of Govt of India:

The government has budgeted fiscal deficit to be Rs 16.61 lakh crore or 6.4 per cent of the GDP in the current year ending March 2023. The deficit is funded by market borrowings. The government’s fiscal deficit in end-November touched 59 per cent of the full year Budget Estimate on increased capital expenditure and slow growth in non-tax revenue.

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