Fiscal Deficit at 120% of Annual Target at October-end, Impacted by Covid-19 Lockdown

The Union government’s fiscal deficit further widened to Rs 9.53 lakh crore, which is nearly 120 per cent of the annual budget estimate, at the end of October of the current financial year, according to official data released on Friday. The deficit widened mainly on account of poor revenue realisation. The lockdown imposed to curb spreading of coronavirus infections had significantly impacted business activities and in turn contributed to sluggish revenue realisation.

The fiscal deficit at the end of September 2020 was about 114.8 per cent of the annual budget estimate. In absolute terms, the fiscal deficit stood at Rs 9,53,154 crore at October-end, which is 119.7 per cent of the annual budget estimates, as per the data released by the Controller General of Accounts (CGA).

In the first seven months of 2019-20, the deficit was at 102.4 per cent of the annual target. The fiscal defict or gap between the expenditure and revenue had breached the annual target in July this year.

The government received Rs 7,08,300 crore — which is 31.54 per cent of 2020-21 budget estimate of total receipts — up to October. It comprised Rs 5,75,697 crore of tax revenue (net to centre), Rs 1,16,206 crore of non-tax revenue and Rs 16,397 crore of non-debt capital receipts. Non-debt capital receipts consist of recovery of loans of Rs 10,218 crore and disinvestment proceeds to the tune of Rs 6,179 crore.

Total receipts in the April-October period of 2019-20 was nearly 45 per cent of the annual target. In the current financial year, Rs 2,97,174 crore was transferred to state governments as part of devolution of share of taxes by the Union government till the end of October. The amount under devolution was Rs 69,697 crore lower compared to the year-ago period.

Till October of the current fiscal, total expenditure incurred by the Centre was Rs 16,61,454 crore — which is 54.61 per cent of 2020-21 budget estimate. Out of the total amount, Rs 14,64,099 crore was on revenue account and Rs 1,97,355 crore on capital account, as per the data. Out of the total revenue expenditure, Rs 3,33,456 crore was from interest payments and Rs 1,85,400 crore on account of major subsidies.

For this financial year, the government had pegged the fiscal deficit at Rs 7.96 lakh crore or 3.5 per cent of the GDP in the 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 outbreak of the coronavirus. Fiscal deficit had soared to a seven-year high of 4.6 per cent of the Gross Domestic Product (GDP) in 2019-20, mainly due to poor revenue realisation.