FY23 deficit target met, capex marginally lower

The Centre is learnt to have met the fiscal deficit target (revised estimate) of 6.4% of the nominal gross domestic product (GDP) in 2022-23, as marginally higher net (post-devolution) tax receipts offset the impact of a slight downward revision of the GDP in the second advance estimate.

The overall expenditure was slightly lower than the respective RE, with capital expenditure of over Rs 7.2 trillion, as against RE of Rs 7.28 trillion, an informed source said. “The fiscal deficit in percentage terms will be at the RE level of 6.4%, unless the provisional GDP figures vary much from the second advance estimate, which is quite unlikely. The absolute deficit will be a little below RE of Rs 17.55 trillion,” the source said, adding that all the budget numbers for last fiscal came “almost accurate” vis-a-vis the RE.

The provisional GDP numbers for FY23 will be released by May-end.

According to the second advance estimate, nominal GDP in FY23 was estimated to be Rs 272.04 trillion, 0.38% lower than the first advance estimate of Rs 273.08 trillion. Since the budgetary deficit was based on the first advance estimate, the fiscal deficit could have been marginally higher if everything else had remained constant.

With the Centre’s revenue expenditure is almost near FY23RE of Rs 34.59 trillion, the total expenditure in the year will be a tad below the RE of Rs 41.87 trillion, the source said.

To account for greater revenue expenditure on subsidies, such as food and fertilisers, the Centre’s expenditure for FY23 was increased by Rs 2.42 trillion or 6.14% to Rs 41.87 trillion in the RE from the budget estimate (BE) of `39.44 trillion.

In FY23RE, the net (post-devolution) tax revenue target was raised by 8% to Rs 20.87 trillion. The actual net tax receipts are slightly higher than the RE thanks to direct taxes.

Direct tax receipts, net of refunds but before devolution, stood at Rs 16.61 trillion in FY23, 0.67% more than the RE of `16.5 trillion, according to provisional estimates. The Centre’s total indirect tax collection (before devolution) in FY23 was `13.82 trillion, just Rs 3,000 crore short of the revised estimate of Rs 13.85 trillion for the fiscal.

The government’s non-tax revenues have exceeded the FY23RE thanks to Rs 16,000 crore extra dividend received from CPSEs and other government investments. The extra non-tax revenues have helped the Centre fully bridge the Rs 14,700 crore shortfall in disinvestment receipts.