The central government has surpassed its fiscal deficit target for the period Apr - Feb’19. Further it is equivalent to 134.2 per cent of the budgeted target, higher than that in the comparable period a year ago (120.3 per cent), said a report by Care Ratings in Union Government Account at a glance. The reasons behind such huge deficit comes after lower tax collections, viz. integrated goods and services taxes (IGST) along with higher revenue expenditure incurred in the first 11 months of the fiscal year, even as capital expenditure has been lower this year. For this fiscal year, the focus of capital expenditure has been defence (34 per cent), roads (19 per cent) and railways (18 per cent), which together accounted for 71 per cent of the total capital expenditure. The report highlights collections from non-tax revenues have been nearly 10 per cent higher during this fiscal year from year ago on the back of higher receipts from General, economic and social services.

Says Manisha Sachdeva, Associate Economist, Care Ratings,

“As tax receipts tend to be higher in the last month of the fiscal (Mar’19) and with the disinvestment receipts having surpassed the budget target, the receipts would be higher in Mar’19. This coupled with the lower capital expenditure this year could see the government maintaining the fiscal deficit for the year within the revised 3.4 per cent of GDP target (3.3 per cent earlier target).”

On the positive side, the Care ratings research states that the government has exceeded its disinvestment target for the year by the 3rd week of March’19. Power Finance Corporation‘s acquisition of Rural electrification Corporation (Rs 14,500 crs) and the investments in CPSE ETFs (Rs.9,500 crs) helped the government to meet its targets.