The fiscal deficit of India creeps to 92.4% of the full-year target in July

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Indian economy

August 31, 2017

The fiscal deficit of our nation was Rs.5.05 lakh crore at the end of July. Amounting to 92.4% of the full-year estimate of 2017-18, it was monstrously disproportionate to the corresponding estimate which was 73.7%.

In layman’s terms, the difference between the government’s expenditure and its earning was more than anticipated. In other words, the government made a bigger loss than they expected to. Estimating a deficit of 3.2% of the GDP, Rs.5.46 lakh crore was the full-year deficit estimate. However, the country had already summed up a deficit of Rs.5.05 lakh crore in the first four months, as mentioned earlier.

Roughly 31% of the government’s capital expenditure target was met in the first four months of FY18 while the total expenditure stood at Rs.8.08 lakh crore; a little more than a third of the total budget of 2017-18.

In an effort to kick-start the investment cycle, the government presented the budget early and front-loaded subsidy payments. This is what caused the increase in the nation’s expenditure, experts say.

Industries that witnessed an increase in expenditure when compared to the same period last year are consumer affairs, railways, agriculture, and defence.

While the government has exceeded the target of the initial GST collections, it’s difficult to determine at this phase whether the government would be able to achieve the fiscal deficit target of 3.2% of GDP for FY18, says Aditi Nayar, Principal Economist, ICRA Ltd.

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