News Excerpt:
The Union government’s fiscal deficit for the last financial year came in at 5.6% of the Gross Domestic Product (GDP), lower than the revised estimate (RE) of 5.8%, on the back of better than anticipated revenues and some expenditure compression.
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Fiscal Deficit:- A country’s fiscal balance is measured by its government’s revenue vis-a-vis its expenditure in a given financial year. Fiscal deficit, the condition when the expenditure of the government exceeds its revenue in a year, is the difference between the two. Fiscal deficit is calculated both in absolute terms and as a percentage of the country’s gross domestic product (GDP). |
More detail about news:
- The budget estimate (BE) for the deficit in FY 24 was 5.9%. In absolute terms the deficit stood at Rs 16.5 trillion as against the RE of Rs 17.3 trillion and BE of Rs 17.8 trillion, according to data released by the Controller General of Accounts.
- For the current financial year the fiscal deficit target has been set at 5.1% of GDP. The fiscal consolidation path of the government has put the target of deficit below 4.5% by 2025-26. The government is, however, sitting on Rs 2.1 trillion dividend from Reserve Bank of India that may give headroom to bring down the deficit further.
Factors associated with fiscal deficit
- The biggest jump came in non-tax revenue receipts due to higher dividends.
- The performance on the tax and non-tax revenue front at the close of the year was better than even the revised estimates that were put out in February in the interim budget when the 10-month performance on the government income and expenditure was known.
- Total expenditure for FY 24 was Rs 44.4 trillion as against the revised target of Rs 44.9 trillion. The revised target was lower than the budget estimates of Rs 45.0 trillion. The total revenue receipts during the year were Rs 27.2 trillion higher than the revised target of Rs 26.9 trillion and budget estimates of Rs 26.3 trillion.
- Capital expenditure, which has been the focus of the government for the past few years increased to Rs 9.48 trillion in FY 24 from Rs 7.39 trillion last year. The capex target for the year was revised down to Rs 9.49 trillion from Rs 10 trillion in budget estimates.
- The subsidy bill for FY 24 was Rs 4.1 trillion as against Rs 5.3 trillion in the previous year due to major contraction in food and fertiliser subsidy.
- Tax revenue of Rs 23.2 trillion was a little higher than the revised estimates but lower than budget estimates of Rs 23.3 trillion.
- Non tax revenue saw a big jump during the year and was Rs 1 trillion more than the budget estimates.The proceeds from dividends and profits was Rs 79443 crore more than revised estimates and settled at Rs 1.70 trillion. Total non-tax revenue was Rs 4.01 trillion.
