India's fiscal deficit is more than double its FY21 target

New Delhi, The Union government's fiscal deficit soared to ₹10.75 lakh crore, or 135.1% of the 2020-21 Budget Estimates (BE), at the end of November 2020, mainly on account of low realisation of revenue due to disruption in business activities amid the coronavirus pandemic.

The fiscal deficit at the end of November 2019 had stood at 114.8% of 2019-20 BE.

In absolute terms, the fiscal deficit stood at ₹10,75,507 crore at the end of November 2020, according to the latest data released by the Controller General of Accounts (CGA).

The lockdown imposed to curb the spread of coronavirus had significantly impacted business activities and, in turn, contributed to sluggish revenue realisation.

The fiscal defict, or gap between the expenditure and revenue, had breached the annual target in July this year.

The government's total receipts stood at ₹8,30,851 crore (37% of BE 2020-21) till the end of November 2020. This included ₹6,88,430 crore tax revenue (net to centre), ₹1,24,280 crore of non-tax revenue and Rs 18,141 crore of non-debt capital receipts. Non-debt capital receipts consist of recovery of loans and disinvestment proceeds.

The tax revenue collection was 42.1% of BE of 2020-21, compared with 45.5% of BE (2019-20) during the corresponding period a year ago. Non-tax revenue was 32.3% of BE. During the corresponding period of the last fiscal, it was 74.3% of BE 2019-20.

During the corresponding period last fiscal, the total receipts were 48.6% of 2019-20 BE.

According to the data, over ₹3.34 lakh crore were transferred to state governments as devolution of share of taxes by the Government of India up to November 2020.

The CGA data said the total expenditure incurred by the government stood at ₹19,06,358 crore or 63% of BE. Of the total expenditure, ₹16,65,200 crore was on revenue account and ₹2,41,158 crore on capital account.

It further said that out of the total revenue expenditure, over ₹3.83 lakh crore was on account of interest payments and ₹2,02,119 crore towards major subsidies.

For this financial year, the government had pegged the fiscal deficit at ₹7.96 lakh crore or 3.5% of the GDP in the Union Budget, which was presented by Finance Minister Nirmala Sitharaman in February 2020. These figures, however, may have to be revised significantly in view of the economic disruptions created by the coronavirus pandemic.

Fiscal deficit had soared to seven-year high of 4.6% of the gross domestic product in 2019-20, mainly due to poor revenue realisation.


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