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SharePrima facie, the fiscal position of the Centre has taken a hopeful turn, with both the revenue deficit and the fiscal deficit as of end-September 2009 constituting 58.4% and 49.3% of the Budget estimates for 2009-10.
At this point a year ago, revenue deficit had soared to 141.9% of that year's projection and fiscal deficit to 77%.To be sure, revenue buoyancy is conspicuously missing but with expenditure proving to be a laggard, the mismatch between receipts and outgo had narrowed during the first half, resulting in a better fiscal profile of the government.
Also, with the Budget pegging the revenue and fiscal deficits at a hefty Rs 2,82,735 crore and Rs 4,00,996 crore, the performance to date may not be much to crow about.
But, what is really troubling about the budgetary trends is that they are not indicative of an economy on the mend.
Gross tax collections till September 2009 were lower by 7.6% at Rs 2,58,880 crore than what they were last year. While corporation tax and income-tax mop-up have risen by a meagre 7% each, all the major indirect taxes have yielded lower revenues; collection from customs duties is down by a whopping 32.9%, from Union excise by 22.9% and from service tax by 3.7%.
However, the blow was softened by an unexpected bonanza in the form of vastly improved realisations from two other sources -- income from dividends and profits has gone up to Rs 34,016 crore, amounting to 68% of the entire year's estimate of Rs 49,750 crore, and mobilisation from disinvestment had zoomed to 384% of the entire fiscal year's anticipated Rs 1,120 crore to Rs 4,299 crore during the first six months of the current year.
With only 73% of the market borrowing programme completed till September -- as compared to 82% during the same period of 2008-09 -- the Centre has some leeway in garnering more funds under this head. In all probability, the net accrual from market loans for the entire year may be adhered to, the Budget estimate being Rs 3,97,957 crore.
Since spending too gathers momentum in the second half, in all probability, the
fiscal arithmetic may not deviate significantly fromthe Budget numbers in
broad terms.
There are other bright spots too. Capital spending has spurted during the April-September 2009 period via-a-vis the preceding year. Total expenditure has been, nevertheless contained due to some degree of success in curtailing the outgo under the non-plan head.
Thus, Centre's spending worked out to 44% of the Budget thus far, which is less than the year-ago share of 46.5%; capital expenditure has improved by nearly four percentage points -- to 31.8% of the current year's projection from 27.9%.
Even the relative share of investment outlay to total government spending has improved to 8.8% this year from 7.4% -- perhaps a sequel to stimulus packages unveiled in the last fiscal.
Still, the fiscal deficit is largely consumption-driven. Till September 2009, revenue deficit as a proportion of the fiscal deficit has risen to 83% from 76% in 2008-09.
