Only Rs 1.35 trillion of the total amount of Rs 2.13 trillion has been spent so far, leaving room for food subsidies. As just half of the money was given, PM Kisan's expenses have also been slow.
Digital Desk: In the first seven months of the current fiscal year, the Center's fiscal deficit increased to 45.6% of the Budget target, up from 36.3% at the same time of the previous year.
After the GDP figures were released, the deficit for the first half of FY23 was 4.7% of GDP.
Experts are confident that the deficit, which is the difference between the government's spending and income, will exceed expectations in the current fiscal year by up to Rs 1 trillion. Although the nominal GDP may exceed the budget assumption by up to Rs 22 trillion, according to the percentage of GDP, it may not exceed the budget estimates of 6.4% or slow down only a minor slippage.
“We do believe that under ceteris paribus conditions, an additional Rs 1 trillion deficit would be absorbed quite seamlessly at the targeted ratio of 6.4 percent given that GDP in nominal terms would be higher than expected about Rs 272-280 trillion as opposed to the assumed Rs 258 trillion in the Budget, " said Bank of Baroda Chief Economist Madan Sabnavis.
Although there are very good odds that the planned amount will be reached, there may not be a slippage in the worst scenario of more than 0.2-0.3%, he said.
Aditi Nayar, the chief economist at ICRA, stated that after accounting for the anticipated additional spending that is likely in FY23, the fiscal deficit overshoot may only be a modest Rs 1 trillion, given the significant increase in non-excise tax revenues as well as the anticipated savings under other expenditure heads.
"On a higher nominal GDP, the fiscal deficit in FY2023 is unlikely to exceed the planned 6.4 percent of GDP," she said.
Madan cited spending on food and fertiliser subsidies as the reason for the higher fiscal deficit in the first seven months of the current fiscal year compared to the same month of the previous year.
Since the allocated amount for fertiliser is almost gone, the extra amount will be used in the second half of the year.
Only Rs 1.35 trillion of the total amount of Rs 2.13 trillion has been spent so far, leaving room for food subsidies. As just half of the money was given, PM Kisan's expenses have also been slow.
While the government's net tax revenues (post-devolution to states) showed a healthy growth of 11%, the fiscal deficit increased to Rs 7.6 trillion in April–October FY23 from Rs 5.5 trillion in the first seven months of FY22 due to a 14% contraction in non–tax revenues, a 10% increase in revenue expenditure, and a strong 62% expansion in capital expenditure.
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