India’s Fiscal Deficit Reaches 25.3% of Full-Year Target at the End of June 2023

India's Fiscal Deficit Reaches 25.3% of Full-Year Target at the End of June 2023
India's Fiscal Deficit Reaches 25.3% of Full-Year Target at the End of June 2023

India’s fiscal deficit, the gap between the government’s total expenditure and revenue, has become a matter of concern as it reaches 25.3% of the full-year target at the end of June 2023, according to data released by the Controller General of Accounts (CGA). This article sheds light on the fiscal deficit scenario in India, examining previous years’ figures and the government’s projected targets for the current financial year (2023-24).

Fiscal deficit serves as a critical economic indicator, signifying the extent to which the government needs to borrow to bridge the gap between its expenditure and revenue. A high fiscal deficit can impact inflation, interest rates, and overall economic stability.

In the previous financial year 2022-23, India’s fiscal deficit was recorded at 6.4% of the Gross Domestic Product (GDP), which was lower than the earlier estimate of 6.71%. The government aimed to further reduce the fiscal deficit to 5.9% of the GDP for the current financial year 2023-24.

However, as of the end of the first quarter (June 2023), the fiscal deficit has already reached 25.3% of the full-year target. In absolute terms, this amounts to a staggering Rs 4,51,370 crore. This level of deficit is considerably higher compared to the same period in the previous financial year when it stood at 21.2% of the Budget Estimates (BE).

Looking at the revenue side, the net tax revenue collected by the government during the first three months of 2023-24 was Rs 4,33,620 crore, accounting for 18.6% of the BE for the current fiscal year. In comparison, at the end of June 2022, the net tax revenue collection was higher at 26.1%.

On the expenditure front, the central government’s total expenditure during the first quarter of 2023-24 amounted to Rs 10.5 lakh crore, representing 23.3% of the BE. This expenditure level was slightly lower than the previous year’s corresponding period when it stood at 24% of the BE.

Breaking down the expenditure, Rs 7.72 lakh crore was allocated to the revenue account, and Rs 2.78 lakh crore to the capital account. Significant components of revenue expenditure included Rs 2,43,705 crore on interest payments and Rs 87,035 crore on major subsidies.

As the government monitors the fiscal deficit closely, these figures indicate the need for careful management of public finances to ensure economic stability and sustainable growth in the country.