The government has released data stating that the fiscal deficit for the first three months of the financial year has reached more than 61% of the budget estimate. A fiscal deficit occurs when the government’s total expenditures exceed the revenue generated. More than Rs.7 lakh crore is listed as a fiscal deficit for the current fiscal year.
The Controller General of Accounts has specified that the government has received a revenue of over Rs.2.89 lakh crore during the first three months of the financial year. The split of this revenue is—Rs.2.51 lakh crore of tax revenues, Rs.33,475 crore of non-tax revenue, and Rs.4,764 crore of non-debt capital receipts.
Out of the revenue generated, about Rs.1.48 lakh crore was shared with all the states as a share of the taxes for the first quarter. This amount has reduced by Rs.8,896 crore as compared to the previous year.
When it comes to the expenditure, the Centre has made a total expenditure of more than Rs.7.21 lakh crore. The total expenditure consists of components such as revenue account and capital account which has Rs.6.58 lakh crore and Rs.63,000 crore respectively. More than Rs.1.41 lakh crore of the expenditure was made on account of interest payments and over Rs.1.51 lakh crore was spent on providing major subsidies.
Since the first quarter of the financial year had elections and the budget announcement, a high proportion of expenditure has been incurred. Even the tax collection at the states’ gross level has only increased by 1% during this time.
It is possible to have many reasons for revenue slippage such as direct and indirect tax collection; dividends/surplus from RBI, nationalised banks, and other financial institutions; and more. Irrespective of the revenue generated, the expenditure on the essential commitments cannot be reduced for the sake of maintaining the fiscal deficit.