The fiscal deficit is likely to be revised upwards from 3.4% in the upcoming Budget in July to take on the economic slowdown in the country. The move is aimed at stepping up public expenditure while keeping in mind that the tax revenue is not going to pace up in order to match the increase in expenditure.
"In a scenario where consumption, demand, investment and capital formation need support, fiscal deficit can be secondary point though profligacy will not be tolerated and the revision in the deficit will be well-controlled," sources told the ET.
Deviating from the fiscal consolidation path as per the Fiscal Responsibility and Budget Management (FRBM) Act, the government in February's interim Budget pegged the fiscal deficit for 2019-20 at 3.4 per cent of gross domestic product (GDP), as against the original target of 3.1 per cent.
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The Budget to be presented amidst a gripping slowdown is expected to address the concerns by taking steps to rationalise tax, undertake public spending in infrastructure, social and farmers' schemes and job creation, the report said.
Although, the FY19 fiscal deficit figure is yet to be announced, the NDA dispensation has brought it down in the last five years and broadly averted any big slippage in the deficit since it came to power in 2014.
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India's fiscal deficit was at Rs 8.51 lakh crore in February-end touching 4.52 per cent of GDP, a senior Finance Ministry source told a news agency. "The receipts are sufficient to cover only 61 per cent of expenditure. As a percentage to GDP, fiscal deficit is 4.52 per cent and revenue deficit is 3.45 per cent," says the Finance Ministry note, IANS reported. The figures mean fiscal deficit has crossed 134 per cent of the government's budget estimate. Last year, the deficit stood at 120 per cent, during the same period.
In FY19, the total expenditure was Rs 21.9 lakh crore or 89 per cent of the budget estimate. Total expenditure comprised revenue expenditure of Rs 19.15 lakh crore, at 89 per cent of budget estimate, and capital expenditure of Rs 2.73 lakh crore at 87 per cent of budget estimate.
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Further, at the end of February, the total receipts stood at Rs 13.37 lakh crore, or at 73 per cent of the budget estimate. Gross tax collection had touched Rs 16.92 lakh crore or 75 per cent of the budget estimate against 81 per cent in the same period of the previous fiscal.
The net tax revenue to the Centre was of the order of Rs 10.93 lakh crore, or 74 per cent of BE, after deducting devolution to States (Rs 5.96 lakh crore) and collections under national calamity and contingency duty (NCCD) to be transferred to the National Disaster Response Fund or NDRF ( Rs 1,520 crore).
Total receipts include Net Tax Revenue to Centre (Rs 10.93 lakh crore), Non Tax Revenue (Rs 1.71 lakh crore) and Other Receipts (Rs 71,662 crore), the figures showed.
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(With agency inputs)