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ShareWith total receipts of the Centre lower by 10.1% till July 2009 in relation to the same period of 2008, and total expenditure up by 13%, the budgetary position continues to be grave; the fiscal deficit stood at Rs 158,554 crore during the first four months of 2009-10 as against Rs 115,980 crore a year ago and the revenue deficit has soared to Rs 134,778 crore from Rs 100,213 crore.
While the budget had anticipated a setback in tax mop-up to the tune of 6.5% for the entire fiscal, as of end-July, the performance has been even worse; tax revenue was down by 14.8% at Rs 86,309 crore.
Direct tax collections were only marginally higher -- 4.7% in corporation tax and 5.9% in income tax -but the haul from both customs and Union excise fell sharply by 34.5% and 26.7%, respectively. A fractional decline was seen in service tax as well.
Non-plan spending, however, remained buoyant, recording an incremental growth of 22.8% to Rs 194,868 crore till July but there was a let-up in plan expenditure to the extent of 7.4%, which was of the order of Rs 70,376 crore.
That is to say, expenditure under plan heads so far this year had trailed behind what was evident last year.
However, when the government spending is classified under revenue and capital heads, it appears that, capital expenditure has got a big boost since the commencement of 2009-10; from Rs 16,638 crore last year, amount earmarked under this head had gone up by nearly 51% to Rs 25,088 crore.
Yet, considering the very small share of capital expenditure in the total, this trend, only if it is sustained, could be termed as significant.
With the mismatch between revenue and expenditure glaring, the Centre has tapped the market in a big way. During the four months ending July, it has mobilised Rs 178,874 crore or 45% of the year's total of Rs 397,957 crore.
At this point of time a year ago, market loans had contributed to the exchequer a much smaller amount of Rs 47,166 crore or 42% of the budget estimate for 2008-09.
Thus, though the level of market borrowings as a proportion of the budgetary proportion has gone up by a mere three percentage points, the absolute sum availed of so far is substantial.
In the case of revenue and fiscal deficits, when expressed as a share of the budgetary projection for the entire year, the fact that they are much lower as of July 2009 than at the end of July 2008, is not vested with much significance.
If the revenue deficit in relation to the budget was 47.7% now as against 181.6% a year ago and the fiscal deficit at 39.5% as against 87%, it is because the budget for 2009-10 had envisaged a very elevated level of revenue and fiscal deficits for the current year at Rs 282,735 crore and Rs 400,996 crore, respectively.
The absolute size of these deficits is higher for the latest period than what they were during the same period of the preceding fiscal.
Moreover, much of the borrowings has been to meet current expenditure- and to a greater extent than envisaged in the fiscal policy.
According to the budget for 2009-10, 70.5% of the revenue deficit would be financed by the fiscal deficit; the actual till July 2009 is 85%.
