India: Fiscal deficit at 91.3% of budget estimate in Sep 17

  • Fiscal deficit improves to 91.3% of the budget estimate at the end of Sep 17 from 96.1% at the end of Aug 17 as revenues picked up pace. There had been worry in some quarters after Aug 17’s figures showed that the fiscal deficit target of 3.2% of GDP for FY18 will be breached.
  • The government has so far maintained that the target will be met. In absolute terms, fiscal deficit is pegged at INR4.99tr at the end of Sep 17, down about INR260bn from Aug 17 as a second instalment of corporate taxes allowed revenue to exceed spending in the month.
  • “As of now we are not looking at any relaxation government has very clearly stated we would like to remain within the boundaries which we have set for ourselves,” Finance Secretary Ashok Lavasa, who is also the finance secretary, had said ruling out any immediate rethink on fiscal target.
  • Net tax collections at INR5.42tr added up to 44.2% of the total budgeted collection for FY18, better than 42.5% at the same point in FY17. Likewise, total expenditure at the end of Sep 17 was 53.5%, higher than 52% at the end of Sep 16. Capital spending has lagged revenue spending so far in 2017 in contrast to 2016 when capital spending was ahead.
  • Capital spending was up 8.5% y/y from Apr 17 to Sep 17 and added up to 47.3% of the budget estimate, lower than 54.7% at the same time last fiscal. However, higher capital spend in FY17 was partly due to much higher loans component – INR460bn against INR200bn in the current fiscal. Revenue deficit also improved to 118% of budget estimate after six months against 134% at the end of Aug 17.

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