India successfully meets 6.4% fiscal deficit target for FY23

In a positive development the Union government’s fiscal deficit was in line with the government’s revised budget estimate of 6.4% of GDP, thanks to robust revenue receipts and expenditure management.

According to the data released by the Controller General of Accounts (CGA), the fiscal deficit in absolute terms for the fiscal year 2022-23 was Rs 17.3 lakh crore, slightly lower than the previous year’s figure of Rs 17.5 lakh crore. Total receipts for FY23 reached Rs 24.6 lakh crore, surpassing the centre’s revised estimate of Rs 24.3 lakh crore, an increase of 11.2% over FY22.

The fiscal deficit represents the difference between the government’s revenue and expenditure. Indian economy’s recovery following the Covid-19 pandemic has resulted in sharp revenue growth, with monthly gains in Goods and Services Tax (GST) receipts proving particularly very robust.

“The fiscal deficit of the Union Government, estimated at 9.2% of GDP during the pandemic year FY 2020-21, moderated to 6.7% of GDP in FY 2021-22 and is budgeted to decline further to 6.4% of GDP in FY 2022-23,” reads the statement of fiscal policy mandated as per the Fiscal Responsibility and Budget Management (FRBM) Act on February 1.

Earlier, during rolling out of the Budget 2023, Finance Minister Nirmala Sitharaman too had spoken about government’s aim to further reduce the fiscal deficit to 5.9% of GDP in 2023-24, and eventually hit the 4.5% mark by FY26. “In my Budget Speech for 2021-22, I had announced that we plan to continue the path of fiscal consolidation, reaching a fiscal deficit below 4.5 per cent by 2025-26 with a fairly steady decline over the period,” she said in her latest Budget speech on February 1.”

India’s Chief economic adviser (CEA) V Anantha Nageswaran stated that the fiscal deficit numbers show that “the fiscal consolidation is on track”. Stressing on the fiscal deficit number for FY23, the CEA said it is as budgeted “and, therefore, we are on track on the back of sustained economic growth to achieve (a fiscal deficit of) 5.9% (of GDP) budgeted for the current financial year”.

Findings of the CGA data

According to the CGA data, the overall expenditure of the central government in FY23 amounted to Rs. 41,88,837 crore. Of this, a sum of Rs.34,52,518 crore was spent on revenue account, whereas Rs. 7,36,319 crore were spent on capital account. As per a statement from the finance ministry, out of the total revenue expenditure, an amount of Rs. 9,28,424 crore was allocated for interest payments, while Rs. 5,30,959 crore were allocated for significant subsidies.

As for the revenue generation aspect, the Centre collected a total of Rs. 24,55,706 crore in receipts during the fiscal year 2022-23. This amount consisted of RRs. 20,97,368 crore in tax revenue (net to the center after sharing with states), Rs. 2,86,151 crore in non-tax revenue, and Rs. 72,187 crore in non-debt capital receipts. Non-debt capital receipts comprise recovery of loans ( ₹26,152 crore) and miscellaneous capital receipts ( ₹46,035 crore).

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