Core infra sectors clock fastest growth in 3 months
Meanwhile, India’s fiscal deficit during the first 11 months of FY24 stood at ₹15.01 trillion
Mumbai: India’s rice export prices rose this week as traders factored in higher duty on rice shipments, while demand remained lacklustre in Thailand. India’s 5% broken parboiled variety was quoted at $550-$558 per tonne this week, up from last week’s $543-$550. Earlier this month, prices hit a record high of $560. New Delhi imposed a 20% export duty on parboiled rice exports in August 2023 to control domestic rice prices.
The output of eight core infrastructure sectors, which account for two-fifths of India’s industrial output, expanded by 6.7% in February—the fastest pace in three months— according to data released by the commerce and industry ministry on Thursday.
The latest core sector data showed that seven of the eight core industries— coal, crude oil, steel, cement, electricity, fertilizers, refinery products and natural gas—reported a rise in production. Only output in fertilizers contracted during the month.
“There has been all-round performance across all sectors barring fertilizers, which can be explained by high base effect as well as the fact that this is the period of harvest where there is less demand for the products,” said Madan Sabnavis, Chief Economist at the Bank of Baroda.
Meanwhile, India’s fiscal deficit during the first 11 months of FY24 stood at ₹15.01 trillion, or 86.5% of the revised annual estimate, according to data released by the Controller General of Accounts.
The fiscal deficit for the corresponding period of the previous year was ₹14.54 trillion, or 82.8% of the annual estimate of ₹17.55 trillion for FY23.
The budgeted annual estimates for fiscal deficit, revised in the vote on account budget on 1 February, stands at ₹17.35 trillion for FY24.
The narrowing of the fiscal deficit, despite a jump in government spending to fuel economic growth, was due to higher tax receipts and an increase in nontax revenue.
The Centre aims to narrow the fiscal deficit—the difference between the government’s income and expenditure—to 5.8% of gross domestic product during FY24, from 6.4% in the previous fiscal year.
The fiscal deficit target was revised
Seven of the eight core industries reported a rise in production. 6.7 from 5.9% of gross domestic product during FY24 during the recently tabled vote-on -account budget.
The government is also committed to lowering the fiscal deficit to 5.1% of GDP by FY25.
A higher fiscal deficit leads to a higher debt burden and more spending on debt servicing, which can be unhealthy for an economy and risks devaluing the currency and impacting private investments. Capital expenditure rose to ₹8.06 trillion during April-February FY24, or 84.8% of the revised annual estimate, from ₹5.90 trillion in the same period in FY23.
Revenue expenditure rose to ₹29.42 trillion, or 83.1% of the revised annual estimate, from ₹29.03 trillion in the corresponding period in FY23.
Total expenditure rose to ₹37.47 trillion, or 83.4% of the revised annual estimate, from ₹34.94 trillion in the corresponding period in FY23.
Total receipts during the April-February FY24 period stood at ₹22.46 trillion, or 81.5% of the revised annual estimate, of which tax receipts stood at ₹18.49 trillion, or 79.6% of the revised annual estimate. Non-tax revenue stood at ₹3.60 trillion, or 95.9% of the revised annual estimate.
The surge in the Centre’s fiscal deficit in February 2024 can be partly attributed to the higher tax devolution released during the month (₹2.1 trillion in Feb 2024 vs ₹1.4 trillion in Feb 2023), which led to a decline in revenue receipts and net tax revenue in that month, rating agency ICRA said in a statement.
“The GoI’s gross tax revenues need to record an 8% growth in the last month of FY2024 to meet the RE (revised estimates) for the year, which seems achievable,” it said. “The GoI has released ₹10.3 trillion as tax devolution to the states in FY2024 by end-Feb 2024, leaving ₹0.7 billion for disbursal to the states to meet the target tax devolution of ₹11 trillion indicated in the FY2024 RE by the GoI, half as much as the release in March 2023,” it added.
Tax officials must avoid “fishing inquiries” into goods and service tax (GST) related matters, specify the nature of the investigation in formal letters to designated company officials, and avoid vague expressions in letters and summons, under new guidelines from the Directorate General of GST Intelligence (DGGI). This is part of the authority’s effort to put in place procedures that are in sync with ease of doing business, said two persons informed about the development, one of them a government official.
The guidelines, a copy of which was seen by Mint, said that when starting a probe or seeking information which are based on records or are reflected in the statutory books of account or filings, then letters should be written to the designated officers of the business instead of issuing summons.
This procedure applies in the case of a listed company, or state-owned enterprise, government department or agency or any other authority, the guidelines said. Such letters have to specify the reasons for investigation and the legal provisions. Any divergence from this practice at initial stage must be backed by written reasons, the guidelines said.
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