Key points:
- The fiscal deficit stands at Rs 7.96 lakh crore in the year-ago period.
- There is less control over tax revenues since it is dependent on the state of the economy.
- A bleak image of the Indian economy was portrayed by yet another macroeconomic indicator.
- The growth from April to October cumulatively is -13 per cent compared to 0.3 per cent during the same period a year earlier.
The April-October fiscal deficit hit a massive Rs 9.53 lakh crore, accounted for 119.7 per cent of the budgeted target for the full year as tax collections remain under pressure due to the crises of Covid-19.
The fiscal deficit stands at Rs 7.96 lakh crore in the year-ago period, or 102.4 per cent of the amount budgeted.
As data released by Controller General of Accounts:
During the time, revenue receipts were Rs 6.71 lakh crore, or 34.2 per cent of the budgeted target compared to 46.2 per cent last year. As per data reported by the Controller General of Accounts on Friday, total expenditure was Rs 16.61 lakh crore, or 54.6 per cent of the budgeted estimate, below the 59.4 per cent a year earlier.
The Centre has maintained its fiscal deficit target of 3.5 per cent of gross domestic product (GDP) this year, but analysts suggest that 7.5-9.25 per cent would be much greater.
Care Ratings chief economist Madan Sabnavis stated:
The figure for the fiscal deficit is disappointing, although it is along planned lines, experts stated. Revenue has received a hit as collections for tax, non-tax, as well as non-debt capital receipts have been lower, said Madan Sabnavis, chief economist of Care Ratings.
“There is less control over tax revenues since it is dependent on the state of the economy. All taxes are lower except excise taxes,’ he explained.
We assume that deficits based on the expenditure allocations released by the Minister of Finance would double the number, bringing the annual ratio to close to 9-9.25 per cent.
As a result, while tax collections will increase in proportion to growth over the next four months, falls in the first 7-8 months may not be recoverable, Sabnavis said.
Icra’s Aditi Nayar stated:
In 2020-21, Icra’s Aditi Nayar said the fiscal deficit would expand to Rs 14.5 lakh crore or 7.7 per cent of GDP (assuming a 7.5 per cent contraction in nominal GDP).
“With healthy inflows of small savings across the past few months, we do not anticipate a further expansion of the government’s FY2021 borrowing scheme,” she said.
macroeconomic indicator portrayed image of Indian economy:
A bleak image of the Indian economy was portrayed by yet another macroeconomic indicator. Data released by trade as well as industry showed that India’s core sector production contraction deepened in October to 2.5 per cent, despite a sharp recovery in September.
According to data released by the government, the performance of eight primary infrastructure industries was -0.1 per cent in September, compared to -7.3 per cent in August.
Key macroeconomic data is the key sector performance data, suggesting the health of the economy as it covers more than 40 per cent of the index of industrial production (IIP).
The growth from April to October cumulatively is -13 per cent compared to 0.3 per cent during the same period a year earlier.
