Fiscal Deficit crosses 55% mark on account of low revenues and higher expenditure

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Fiscal Deficit crosses 55% mark
The central government's fiscal deficit crosses the target of entire year in just first four months of the FY12. The fiscal deficit shot up to 55.4% and touched Rs 2,28,753 crore in the first quarter of 2011-12 much ahead as compared to previous year on account of low revenues and higher expenditure. Last year same quarter it stood at Rs 90,915 crore.

The government is already upset with lower lower than expected GDP figures which stood at 7.7% for April-June quarter which was 9.3% during the corresponding quarter in 2010, year-on-year (y-o-y).

The rise in deficits was highly due to lower tax mobilization. At the same time, non-tax revenue also fell sharply to 18.4% as against 84.9% an year ago.

Tax revenues were marginally higher, at Rs 1,14,000 crore as against Rs 1,13,000 crore an year ago.

The non-tax revenue stood at Rs 23,077 crore as against the budget estimate of 1,25,435 crore.

As compared to last year, the government has spent more on both plan and non-plan expenditure. However, the percentage of non-plan expenditure spent in the four months accounted for 32.3% of total budget estimates for this financial year, as against 30.3% last year.

The government's revenue deficit was also way higher at Rs 1,94,920 crore or 63.4% of the budget estimate between April and July 2011 as compared to a mere Rs 50,075 crore in a year ago.

Meanwhile, the government's spending remained largely within targets, its total receipts fell below expectations as tax collections were lower due to higher refunds and revenue from disinvestment proceeds failed to materialise during the period. Last year, there was the huge proceeds of over Rs 1,00,000 crore from sale of telecom spectrum for high speed broadband and other services which was not there this year.

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Read more about: gdp, fiscal deficit, government, tax
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