₹16.13 trillion, compared with ₹16.85 trillion in the interim budget, as the finance minister sought to send a strong signal to the market and rating agencies about the government’s commitment to fiscal prudence. The gap between receipts and spending will partly be financed by market borrowing of ₹11.63 trillion, compared with ₹11.75 trillion projected in the interim budget. In the financial year ended in March, the government had raised ₹11.75 trillion from the market.
Following the announcement of the revised fiscal deficit, government bond yields initially fell but later pared some gains as the reduction in market borrowing was less than anticipated. Net tax receipts are projected to grow 11% over a year to ₹25.8 trillion, just a tad above nominal GDP growth of 10.5%. The government’s total receipts, excluding borrowings, are estimated at ₹32.07 trillion.
What really helped revenue receipts grow 14.7% to ₹31.29 trillion was the higher-than-expected dividend from the Reserve Bank of India. In May, the bank cut a dividend cheque of ₹2.11 trillion, up 141% compared to FY23. Thus, overall non-tax revenue is projected at ₹5.4 trillion, a 35% growth over a year ago.
This is also higher than the ₹3.9 trillion estimated in February’s interim budget. The RBI dividend was split equally between fiscal consolidation and higher spending, finance secretary T.V. Somanathan said in a briefing.
The government’s total expenditure, however, grew only 8.5% from a year ago to ₹48.21 trillion. The finance minister held firm to her capital expenditure spending of ₹11.11 trillion. Revenue spending growth was slated to be lower at 6.6%.
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