India's April-November fiscal deficit tops 135% of full-year target

NEW DELHI: India's fiscal deficit stood at Rs 10.75 lakh crore at the end of November, 35% higher than the budget estimate for FY21, according to data from the Controller General of Accounts on Thursday.

There was some ramping up of government spending, which had remained muted so far, with capital expenditure recording a 12.7% jump in November.

"A sustenance of this trend will bolster economic activity and help the Indian economy exit the recession in the coming quarter," said Aditi Nayar, principal economist at ICRA. GDP contraction moderated to 7.5% in the second quarter after a 23.9% shrinkage in the first quarter.

The government's total expenditure up to November rose 4.7% to Rs 19.06 lakh crore. However, even after the pickup in spending in November, it was 62.7% of the budget compared with 65.3% in FY20. Capital expenditure stood at 58.5% of the estimate against 63.3% in FY20.

ICRA estimates the government's total expenditure at Rs 30.2 lakh crore in FY21, mildly lower than the budgeted level, despite the fiscal support measures announced so far.

"Several allocations announced may not finally be invoked this year, which can bring down deficit by Rs 1-2 lakh crore. We do not expect compensations on the revenue side where tax revenue at best is maintaining the monthly target," said Madan Sabnavis, chief economist at Care Ratings.