Fiscal deficit until Dec at 55% of annual target

The Centre's fiscal deficit in the first three quarters of this fiscal touched 55% of the annual target, compared with 58.9% a year before, staying the course to meet the FY24 deficit goal of 5.9% of gross domestic product (GDP) amid a moderation in nominal GDP growth from the budget estimate.

According to the official data released on Wednesday, the fiscal gap until December 2023 in absolute terms remained lower than the level a year before, thanks to a sharp drop in the November deficit.

Union finance minister Nirmala Sitharaman will present the revised estimates on Thursday with the FY25 interim budget.

Between April and December, the deficit touched ₹9.82 lakh crore, against ₹9.92 lakh crore a year earlier. The government kept a lid on revenue spending, which eased for a fourth straight month in December from a year earlier after a bump-up in the initial months and buttressed by growth in the revenue mop-up above the annual target. It has, however, boosted capital spending, which grew 37.5% until December to ₹6.74 lakh crore, having hit 67.3% of the annual target against 65.4% a year before.

However, the fiscal gap in December alone widened to ₹75,694 crore, more than five times the November level. This was because in November, tax devolution to states--already frontloaded--had remained sharply low, while revenue spending had contracted, and capital expenditure had seen only a marginal rise. Capital spending in December, however, more-than-doubled to ₹87,985 crore from the same month a year before, while net tax collection moderated.