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HomeEconomyFiscal Deficit Reaches 64% by January; Capex Declined Last Month

Fiscal Deficit Reaches 64% by January; Capex Declined Last Month

The Centre’s capital expenditure experienced a significant decline of 40.5% in January, amounting to ₹47,600 crore compared to ₹80,000 crore recorded in the same period last year. Meanwhile, by the end of January, the fiscal deficit reached 64% of the revised estimates for the fiscal year 2023-24.

With only two months remaining in the financial year, it is anticipated that the government may fall short of its capex target and is also lagging behind in its revenue expenditure plans. However, experts suggest that the government is likely to comfortably achieve the revised deficit goal of 5.8% of GDP.

Aditi Nayar, Chief Economist at ICRA, predicts that the government may undershoot the capex target by at least ₹50,000 crore, considering that ₹2.3 lakh crore needs to be spent in February and March to meet the full-year target. Gross tax revenues are expected to increase by just 6% over these two months to achieve the 2023-24 goal, with corporate taxes likely to surpass last year’s collections.

Madan Sabnavis, Chief Economist at Bank of Baroda, highlights that only about 75% of the total planned expenditure for the year has been incurred in the first ten months, indicating a high potential for increased expenditure in the remaining two months. He also notes that expenditure levels in ministries such as Agriculture and Consumer Affairs, responsible for schemes like PM Kisan and food subsidies, are below 70%. Similarly, the rural development ministry has seen similar spending levels.

Despite these expenditure patterns, the overall fiscal deficit stood at ₹11 lakh crore by January, which is lower than the ₹11.9 lakh crore recorded over the same period in 2022-23.