Government’s Fiscal Deficit surged to Rs 2.73 lakh crore in April-August 2011 Period

According to Comptroller General of Accounts data released on 30 September, the government’s fiscal deficit surged nearly two-fold to Rs 2.73 lakh crore during the first five months (April-August) of the current fiscal 2011-12 due to low revenue realisation. Deficit was Rs 1.5 lakh crore in April-August period of 2010.

The higher deficit in the April-August, 2011 was attributed to slowdown in net revenue collection following higher refunds and moderation in economic growth rate. The government decided to increase 2011’s borrowing target by an additional Rs 53,000 crore anticipating slower tax collections and lower disinvestment proceeds.

The deficit in the April-August period was 66.3 per cent of the target originally estimated at the beginning of the 2011-12 fiscal for the whole year.

Prime Minister's Economic Advisory Council (PMEAC) chairman C Rangarajan  pointed out that the target to cut fiscal deficit to at 4. per cent of the GDP for the current financial year would be missed. The government's decision to borrow Rs 52872 crore more from the market, over and above Rs 4.17 lakh crore estimated earlier for the current year, put pressure on the deficit number.

The net tax revenue receipts for April-August period stood at Rs 1.44 lakh crore, which is 21.8 per cent of the budget estimates. On the other hand, total expenditure was at 37.5 per cent of the target at Rs 4.72 lakh crore.

During April-August 2011, the direct tax mop-up was at Rs 96738 crore, which is 3.3 per cent less than the corresponding period in 2010 on account of huge refunds of Rs 57622 crore. The advance tax paid by corporates witnessed a marginal growth of 13 per cent to Rs 68000 crore in the second quarter of 2011-12, compared with the corresponding period in 2010. However, the indirect tax collection in the first five months stood at Rs 1.40 lakh crore, an increase of 26 per cent, over the corresponding period in 2010.

Finance Minister Pranab Mukherjee had lowered the fiscal deficit target to Rs 412,817 crore or 4.6 per cent of the gross domestic product from 4.7 per cent achieved during 2010-11.