Fiscal deficit hits Rs 4.32 lakh crore in Q1

New Delhi: Though the government aims to restrict the fiscal deficit, it widened to Rs 4.32 lakh crore in the first quarter of the current financial year. India's fiscal deficit was Rs 4.29 lakh crore in the same period of the previous fiscal year, according to data released by the Controller General of Accounts (CGA) on Wednesday.

However, the fiscal deficit stood at 61.4 per cent of the annual target of Rs 7.03 lakh crore in the first quarter, while it was 68.7 per cent of 2018-19 budget estimate in the year-ago period.

Finance Minister Nirmala Sitharaman has cut the fiscal deficit target from 3.4 per cent to 3.3 per cent for FY 2019-20 but it reached Rs 3.66 lakh crore by the end of May 2019. The government, however, aims to restrict the fiscal deficit at 3.4 per cent of the GDP in the current fiscal, same as the last financial year.

The CGA data also showed that revenue receipts of the government during April-June 2019-20 was 14.4 per cent of the budget estimate (BE), while it was 15.5 per cent of BE in the year-ago period.

In absolute terms, revenue receipts stood at Rs 2.84 lakh crore at June-end 2019. "During the entire year, the revenue receipts has been pegged at Rs 19.77 lakh crore. The capital expenditure was 18.8 per cent of the BE. This compares with 29 per cent in the year-ago period," the CGA said.

Total expenditure during April-June period stood at Rs 7.21 lakh crore or 25.9 per cent of BE. It was 29 per cent of BE in the corresponding period last fiscal. The government has pegged its total expenditure during the fiscal ending March 2020 at Rs 27.84 lakh crore.

The finance minister has repeatedly said that the fiscal deficit target of 3.3 per cent is realistic and can be achieved, but some economists have raised doubts about achieving the ambitious target of the government.

"The realisation of the target for direct taxes and GST collections, and dividends and surplus from the RBI, nationalised banks, financial institutions, and PSEs, will be crucial to prevent a revenue slippage in FY20," said Aditi Nayar, Principal Economist of rating agency Icra.

"Moreover, the speed with which the disinvestment programme kicks off, as well as the interest was shown by potential buyers in the PSUs being offered for strategic disinvestment, will be critical," she said, adding that at present, we can't rule out that expenditure cuts may be required to prevent a fiscal slippage if the revenue targets are missed.