India’s fiscal deficit for the first nine months of the fiscal year narrows to 55% of the annual target, boosting hopes for economic stability. However, the disappointing performance of the core sector raises concerns. Read on to find out more about the government’s efforts to control inflation and the impact on the upcoming interim budget.
India’s fiscal deficit for the first nine months of the fiscal year through December has narrowed to 55% of annual estimates. This is good news for the country as it shows that the gap between its spending and revenue is decreasing compared to the same period last year.
During this time, total receipts reached 76.3% of the budget target, while overall expenditure was at 67.8% of the budget target. This means that the government has been able to collect a significant portion of the expected revenue and control its spending.
In terms of revenue, receipts totaled 20.42 lakh crore rupees, with tax revenue at 17.30 lakh crore rupees and non-tax revenue at 3.12 lakh crore rupees. Both tax and non-tax revenues have surpassed the budgeted estimates, reaching 74.2% and 103.5% respectively.
However, there is still some room for improvement as the revenue deficit stands at 38.9% of the fiscal year’s budget target. Finance Minister Nirmala Sitharaman is determined to narrow the fiscal gap to 5.9% of GDP, which is a challenging task.
The fact that the fiscal deficit has narrowed ahead of the interim budget for fiscal year 2024 suggests that the government may be avoiding excessive spending in preparation for the forthcoming general election. It is possible that the government will focus on implementing fiscal measures that benefit the lower income group while also tackling the issue of rising inflation.
In other economic news, GST collection for January 2024 reached a second all-time high of over ₹1.72-lakh crore. This shows that the Goods and Services Tax system continues to be a significant contributor to India’s revenue.
Overall, the narrowing of the fiscal deficit and the positive revenue collection indicate that the Indian economy is moving in the right direction. However, challenges still remain, especially in terms of achieving the desired fiscal targets and addressing the slowdown in key industries.