The central government’s fiscal deficit during 2023-24 at 5.6 per cent of the GDP was better than previous estimates of 5.8 per cent on account of higher revenue realisation and lower expenditure, according to official data released on Friday.
In actual terms, the fiscal deficit — or gap between expenditure and revenue — was Rs 16.53 lakh crore, or 5.63 per cent of the GDP, which grew 8.2 per cent in 2023-24.
In the revised estimate for 2023-24, the government had in the interim Budget presented in Parliament on February 1 projected the fiscal deficit of Rs 17.34 lakh crore, or 5.8 per cent of the gross domestic product (GDP).
According to the data released by the Controller General of India (CGA), the government’s revenue collection was 101.2 per cent of the revised estimates (RE) presented in the Budget.
Net tax collection was Rs 23.26 lakh crore in the financial year ending March 2024.
The expenditure worked out to be Rs 44.42 lakh crore.
The expenditure during the last fiscal was 98.9 per cent of the RE.
CGA data also showed that revenue deficit during FY24 was 2.6 per cent of the GDP and effective revenue deficit was 1.6 per cent of the GDP.
Commenting on the data, ICRA chief economist Aditi Nayar said the government’s fiscal deficit was contained below the RE for FY24, benefiting from higher-than-anticipated receipts and lower than estimated revenue spending, with only a marginal miss in capital expenditure.
Vivek Jalan, partner at Tax Connect Advisory Services LLP, a multi-disciplinary consulting firm, said lower fiscal deficit is majorly due to the uptick in tax revenues.
“The encouraging fiscal deficit numbers can be dedicated to the taxpayers of the country.
“The efficiency of the CBDT and CBIC and especially the ground covered in implementation of Artificial intelligence in unearthing fake transactions have also to be appreciated by honest taxpayers,” he said.
For the current financial year (2024-25), the government estimates the fiscal deficit at 5.1 per cent of the GDP, or Rs 16,85,494 crore.
As per the Fiscal Responsibility & Budget Management (FRBM) Act, the government plans to achieve a fiscal deficit of 4.5 per cent in 2025-26.
During 2023-24, the government received Rs 27,88,872 crore (101.2 per cent of corresponding RE of total receipts) comprising Rs 23,26,524 crore tax revenue (net to Centre), Rs 401,888 crore of non-tax revenue and Rs 60,460 crore of non-debt capital receipts.
According to CGA data, Rs 11,29,494 crore was transferred to state governments as devolution of share of taxes by the Government of India, an increase of Rs 181,088 crore year-on-year.
Total expenditure incurred by the central government was Rs 44,42,542 crore (98.9 per cent of corresponding RE of 2023-24), of which Rs 34,94,036 crore was on revenue account and Rs 9,48,506 crore on capital account.
Of the total revenue expenditure, Rs 10,63,871 crore was towards interest payments and Rs 413,542 crore on account of major subsidies.
Meanwhile, according to another CGA data, the fiscal deficit in April was 12.5 per cent of the Budget Estimate (BE) for 2024-25, or Rs 2.1 lakh crore. It was 7.5 per cent of BE 2023-24 in April 2023.
Nayar said while the fiscal deficit for April 2024 has spiked on account of an unexpected surge in revenue spending, in spite of healthy tax revenues, the higher-than-budgeted dividend from the Reserve Bank of India (RBI) is likely to dampen the fiscal deficit in the rest of this quarter.
Overall, the fiscal dynamics appear favourable for FY25, amid continued resilience in GST collections and an unexpectedly large dividend payout by the RBI, she added.
