Fiscal deficit at 3.5 per cent in FY17, spending gathers pace

NEW DELHI: The Narendra Modi government's decision to unveil the budget early seems to have paid off with spending having picked pace in the first month of the financial year itself. The government spent 11.3% of the budgeted expenditure in April, with capital expenditure topping the overall spending.

Fiscal deficit in fiscal 2017 was 3.5% of GDP, in line with the budget projection, reflecting the government's commitment to the process of fiscal consolidation. In fiscal 2016, the deficit was 3.9% of GDP.

"Higher than estimated capital spending has provided a boost to the quality of expenditure relative to the revised estimates. The healthy uptick in service tax collections relative to the revised estimates suggests improved compliance, which is a favourable trend," said Aditi Nayar, principal economist at ICRA.



The government in April spent 9.3% of the planned capex of Rs 3.09 lakh crore, in what could give a big boost to overall growth. Capex spending in April a year earlier was 8.5% of the budget estimate.

Revenue expenditure was 11.6% of the budget estimate in April FY18. The government had advanced the budget to February 1 — the practice was to present it on the last day of February — to eliminate the several-month-long expenditure lag to give the economy a boost.