India's Full Year Fiscal Deficit Target Breached In 4 Months On Lower Revenue Collection

The central government's fiscal deficit breached the full-year budget target in July, just four months into the financial year 2020-21, mainly on account of the impact of lockdown on revenue collections.

Data released by the Controller General of Accounts (CGA) on Monday showed that fiscal deficit in the April-July period was at 103.1 percent of the annual target of Rs 8.21 lakh crore.

It stood at 77.8 percent of the annual target during the corresponding period of last fiscal.

Fiscal deficit, which refers to the difference between expenditure and revenue, had overshot the annual target in October last year.

The government had pegged the fiscal deficit for 2020-21 at Rs 7.96 lakh crore or 3.5 percent of the GDP in the budget presented by Finance Minister Nirmala Sitharaman in February.

These figures, however, have to be revised significantly in view of the economic disruptions created by the outbreak of coronavirus.

The government had imposed a nationwide lockdown from 25 March to prevent the spread of COVID-19 pandemic. The economy was opened up gradually after the lockdown.

Fiscal deficit had soared to a seven-year high of 4.6 percent of Gross Domestic Product (GDP) in 2019-20, mainly on account of poor revenue realisation, which dipped further towards the end of March because of lockdown.

As per the CGA data, the government's revenue receipts stood at Rs 2.27 lakh crore or 11.3 percent of the Budget Estimates (BE). During the same period of last fiscal, the realisation was at 19.5 percent of the BE.

Tax revenue stood at Rs 2.02 lakh crore or 12.4 per cent of BE during the first four months of the fiscal. During the corresponding period of the last fiscal, the tax revenue was at 20.5 percent of BE.

The government's total receipts were at 10.4 percent of BE or Rs 2.32 lakh crore. The government's total expenditure stood at Rs 10.54 lakh crore or 34.7 percent of BE at the end of July.