Aug fiscal gap at 78.7% of FY20 aim

The central government's fiscal deficit rose marginally to Rs 5.538 trillion in AprilAugust, accounting for 78.7% of the Budget estimate for the financial year ending March, data released by the Controller General of Accounts showed.

The Budget had pegged the fiscal deficit at Rs 7.038 trillion, or 3.3% of GDP, for 201920 (Apr-Mar).

The fiscal deficit had accounted for 94.7% of the full year's target in the corresponding period last year.

The fiscal deficit rose only marginally in August because of the transfer of the Reserve Bank of India's surplus for 2018-19 (Jul-Jun). The RBI had transferred Rs 1.481 trillion to the government as in August including surplus and excess provisions.

Consequently, the government's non-tax revenue rose 180.2% on year to Rs 1.547 trillion in August, leading to a lower fiscal deficit of Rs 62 billion during the month compared with Rs 510 billion a year ago.

The government's total expenditure in the first five months of the year rose 9.8% on year to Rs 11.753 trillion, while total receipts increased 29.6% to Rs 6.215 trillion.

Within receipts, net tax revenues in Apr-Aug rose 10.5% on year to Rs 4.046 trillion, while non-tax revenue jumped 102.0% to Rs 1.986 trillion.

The government's revenue expenditure rose 10.7% to Rs 10.391 trillion in April-August, while capital spending rose 3.0% to Rs 1.362 trillion.

The government's fiscal situation is likely to worsen in the coming months after it drastically cut corporation tax for domestic companies to 22% from 30%.