Sharp reduction in capital expenditure during the election months as well as the record high dividend from the Reserve Bank of India (RBI) led to the shrinking of central government’s fiscal deficit to 8.41 per cent of the full year target in the first quarter (April – June) of 2024-25, shows an analysis of the latest data released by the Controller General of Accounts (CGA) on Wednesday together with the latest FY25 Budget figures.
However, the CGA data which uses interim budget figures shows that the centre’s fiscal deficit stood at 8.1 per cent in Q1 FY25.
The fiscal deficit in the corresponding period in FY24 stood at 25.3 per cent of the full year target.
Data shows that the total non-tax revenue for the first three months of this financial year was Rs 2.8 trillion or 70.1 per cent of the budget estimates against 51.4 per cent for the same period last year. Dividends and profits made up 150 per cent of the non-tax revenue, adding up to Rs 2.24 trillion.
Aditi Nayar, chief economist, ICRA Ratings says that the non-tax revenues expanded by 81 per cent boosted by the RBI dividend, amidst a mild 2 per cent growth in revenue expenditure, and a 35 per cent contraction in capex.
“Centre’s capex was tepid at Rs. 374 billion in June 2024, as compared to Rs. 1.1 trillion in June 2023. To meet the FY2025 BE, Rs. 9.3 trillion of capex needs to be incurred in the last three quarters of the year, a growth of 39 per cent relative to the same period of FY2024, which appears quite challenging,” she added.
Meanwhile, the tax revenue for the April-June 2024 period was Rs 5.5 trillion or 21.1 per cent of the budget estimates compared to 18.6 per cent in the first quarter last fiscal year.
The central government’s total expenditure in the first quarter stood at Rs 9.7 trillion or 20.4 per cent of the budget estimates. Of the total expenditure, Rs 7.8 trillion was on the revenue account and Rs 1.8 trillion was towards the capital account.
Fiscal deficit stood at 5.6 per cent of the GDP in 2023 – 24. The government in its latest union budget last week has projected the fiscal deficit to come down to 4.9 per cent of the gross domestic product (GDP) in 2024-25.
First Published: Jul 31 2024 | 8:16 PM IS