Business

India's Fiscal Deficit Improves At 68.7% For Q1 Of FY19

JAVED SAIFI | 0
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| August 1 , 2018 , 11:05 IST

India recorded a fiscal deficit of 69 percent on Tuesday for the first quarter ending June 2018 due to higher revenue collection. The fiscal deficit was 80.8 percent during the same period last year.

The fiscal deficit is the gap between the government's revenue and its expenditure which rose to Rs 4.29 trillion ($62.57 billion) for April-June.

The concerns are high now that the government will not be able to achieve the target to cut the fiscal deficit to 3.3 percent of GDP this fiscal year. The concern increased because of the recent cuts introduced by the government in Goods and Services Tax (GST) and the introduction of Minimum Support Price (MSP) that will lead to increase in the government spending.

The International rating agency Moody’s recorded a revenue loss from the tax cuts at 0.04 percent -0.08 percent of GDP annually, calling the cuts credit negative.

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According to the Controller General of Accounts statement released, Aditi Nayar, principal economist at ICRA Ltd said, “Notwithstanding the mild improvement in the fiscal deficit in Q1FY19 relative to the year-ago level."

"The various fiscal concerns persist, including whether the budgeted targets for GST revenues, dividends and profits and disinvestment would be realised, and whether the outlays required for revised MSPs, the national health protection scheme, fuel and other subsidies, and bank recapitalisation would prove to be adequate,” she added.

“Although Government of India’s fiscal deficit for the first quarter stood at a considerable 69 percent of the BE for the full year, this marks a modest improvement relative to the situation in Q1FY18,” Nayar said in a statement.

As per the data, there is a sharp rise in the indirect tax collections for the first quarter ending in June.

The gross tax revenues up by 22 percent whereas, the net tax revenue rose by 34 percent. Non-tax revenue was up by 39 percent in comparison to previous year.  

On the other hand, the main spending of the government was on roads and railways for this year. The capital spending was up 27 percent for the first quarter in comparison to a year ago.

Disinvestment receipts were Rs 8,760 crore against Rs 7,690 crore a year ago for the first quarter.