INDIA’S FISCAL DEFICIT LIKELY TO FALL SHORT OF BUDGETED FIGURE

NEW DELHI: India’s fiscal deficit for 2020-21 may be a little less than the budgeted 9.5% of gross domestic product (GDP), with both revenue and expenditure expected to be higher than anticipated, according to the finance ministry.

“Revenue is significantly higher than the revised estimates (RE) for 2020-21, while expenditure is also a bit higher than the RE. The fiscal deficit is likely to be slightly lower than budgeted for 2020-21,” a finance ministry official said, under the condition of anonymity.

The fiscal position of the central government has witnessed an improvement in the second half of 2020-21 because of a revival in economic activity. Provisional figures for indirect tax collections for 2020-21 show that the net revenue collection stands at ₹10.71 lakh crore, which is 108.2% of the RE, and has registered a growth of 12.3% over the preceding year.

Goods and services tax (GST) collections of the Centre during 2020-21 stand at ₹5.48 lakh crore. This is 106% of the RE, but 8.5% lower than the last year’s collection of ₹5.99 lakh crore.

In the second half of 2020-21, GST collections registered a good growth and exceeded ₹1 lakh crore in each of the six months because of economic recovery. The provisional figures of net direct tax collections for 2020-21 stand at ₹9.45 lakh crore, 104.5% of the RE.

Fiscal deficit in the first 11 months of 2020-21 stood at 76% of the RE, according to data released by the Controller General of Accounts, which is likely to release data for March by end of May.

The government has the headroom to release a massive ₹6 lakh crore as revenue expenditure for March, said Aditi Nayar, chief economist at ICRA Ratings.

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