India's April-July fiscal deficit at 70% of annual target

NEW DELHI: New Delhi: In a sharp ramp-up in public spending to revive growth, the government spent 34% of the budgeted plan expenditure in the first four months (April-July) of the current financial year, higher than 23% in the same period a year earlier. The fiscal deficit climbed to almost 70% of budget estimates.

Capital spending was up 38.2% as the government looked to turn the investment cycle. The finance ministry has asked ministries such as roads, railways, rural development and agriculture to frontload expenditure in line with the government’s plan to boost growth.

“….We are trying to ensure that difference between budget estimates and revised estimates, as has been the practice in the past, is not there…If at all revised estimates may be a bit superior to the budget estimates,” finance minister Arun Jaitley had said while replying to the discussion on first supplementary demand for grants.



The fiscal deficit in 2015-16 is budgeted at 3.9% of Gross Domestic Product and the government is confident of meeting it comfortably.

The last few years have seen curtailed spending, particularly in plan expenditure, due to fiscal pressures. But with global commodity prices having declined, the government has enough fiscal space to carry out its spending plan to boost growth.

Economists back boost in capex spending to lift the overall investment mood.

“Government has frontloaded plan capital expenditure (84.1% growth), this will help in improving investment sentiments,” said DK Pant, chief economist, India Ratings & Research.

Total expenditure in the first months was 33.8% of the budget estimate at Rs 6 lakh crore. Total expenditure for 2015-16 is pegged at Rs 17.77 lakh crore. The government’s plan spend was 33.9% of the budget estimate at Rs 1.58 lakh crore as against 23% in the same period last fiscal. Non-plan spending was 33.8% of the budget estimate at Rs 4.43 lakh crore.

Revenue receipts picked up at 18.3% as against 14.8% in April-July previous fiscal. Receipts stood at Rs 2.089 lakh crore as against budgeted Rs 11.41 lakh crore.

“The quality of the fiscal outcome has improved, with a decline in the proportion of the revenue deficit within the fiscal deficit to 72% in April-July 2015 from 82% in April-July 2014,” said Aditi Nayar, senior economist, ICRA Ltd.