Fiscal deficit at 6% to exceed government target in FY24: Ind-Ra
fiscal deficit is likely to breach the government’s target of 5.9% in FY24 owing to higher revenue expenditure and lower than budgeted nominal GDP, ratings agency India Ratings and Research said Tuesday.
It noted that although higher tax and non-tax revenue collections may offset the shortfall in divestment earnings, a likely second supplementary demand for grants will upset fiscal calculations, pushing the deficit to 6% of GDP.
“Higher-than-budgeted revenue expenditure triggered through the first and likely second supplementary demand for grants in combination with lower-than-budgeted nominal GDP will push the fiscal deficit to 6.0% of GDP, 10bp higher than budgeted 5.9%,” said Ind-Ra researchers.
The government recently brought in one supplementary demand for grant of Rs 58,380 crore to cover higher spending on fertiliser subsidy and Mahatma Gandhi National Rural Employment Guarantee Programme.
“Through the first supplementary demand the union government will spend more on prioritised areas/sectors such as food, fertiliser and LPG subsidy and National Rural Employment Guarantee Scheme,” Ind-Ra said.
The government is expected to spend Rs 57,360 crore on fertiliser subsidy compared with Rs 44,000 crore budgeted earlier.
It exceeded the MGNREGA budget of Rs 60,000 crore within the first nine months of the year.
Ind-Ra notes that there is likely to be another supplementary grant, pushing the revenue expenditure to Rs 37.1 lakh crore from Rs 35 lakh crore expected earlier.
“Major reason for the increased expenditure is higher expenditure by few select ministries/ departments and recouping of INR281.4 billion to the Contingency Fund of India which was drawn by 30 departments/ ministries as an advance in the past,” it
