Govt source says FY21 fisc gap seen lower than revised aim of 9.5%

Informist, Friday, Apr 9, 2021


–Govt source: See higher than projected revenues, spending in FY21


By Adrija Chatterjee and Shubham Batra


NEW DELHI – The fiscal deficit for 2020-21 (Apr-Mar) is likely to be lower than the revised projection of 9.5% of GDP, a top finance ministry official told Informist.


As per provisional estimates with the ministry, both the revenues and expenditure of the government are higher than what was projected in the revised Budget estimates, yet the government has been able to curtail the fiscal deficit within 9.5%, the official said.


"So for FY21, you will find probably that both revenue and expenditure are a little above RE (revised estimates) and the deficit will be a little below estimates," the official told Informist.


These estimates are unaudited provisional figures, which will be released by the Controller General of Accounts on May 31.


As per data till February, the government's fiscal deficit in 2020-21 was at 14.0 trln rupees, accounting for 76% of the revised target of 18.5 trln rupees or 9.5% of the GDP.


Back-of-the-envelope calculation shows that the government's revenues, mainly the tax revenue, may have exceeded the revised estimates by at least 1 trln rupees in 2020-21.


While in Apr-Feb, the total tax collections on a gross basis were down 0.7% on year at 16.6 trln rupees, on an average, for Oct-Feb, the collections have grown at a healthy 24.5% on year.


Therefore, even if one were to assume no growth in the tax mop-up in March, the tax collections could be at least 1 trln rupees more than the revised estimates of 19.00 trln rupees for 2020-21.


On the expenditure side, the government had an unprecedented space of 6.3 trln rupees to be spent in March, given that in Apr-Feb, the spending had reached 28.186 trln rupees or 81.7% of the full-year target, the data shows.


The government revised its total spending to 34.83 trln rupees for 2020-21, up 28% on year. It usually cuts spending in the last month of the year to meet the deficit target.


Part of the higher expenditure in March can be explained by the massive payout of 3.39 trln rupees by the government, almost 1.2 trln rupees more than budgeted, to clear Food Corp of India's liabilities to the National Small Savings Fund in one shot.


FCI's liabilities to NSSF as on Mar 31 stood at zero.


"2020-21 wasn't a normal year, it won't follow the normal pattern. FCI money will go in one block, that's a huge amount," the official said.


Rest of the space was utilised for routine spending that takes place in the last month, he added.  End


Edited by Vandana Hingorani 



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