FY24 Fiscal Deficit: Surprising Stats & Promising Projections!

The fiscal deficit for the Central government in the fiscal year 2023-24 stands at 5.6% of the GDP, showing improvement from previous estimates of 5.8%. This positive development is attributed to higher revenue realization and lower expenditure, as per official data released recently.

In absolute terms, the fiscal deficit amounted to ₹16.53 lakh crore, which translates to 5.63% of the GDP. Notably, the GDP grew by 8.2% during the same period.

Initially estimated at ₹17.34 lakh crore or 5.8% of the GDP, the revised projection for the fiscal deficit was presented in the interim Budget on February 1, 2024.

Data from the Controller General of India (CGA) reveals that the government’s revenue collection reached 101.2% of the revised estimates (RE) outlined in the Budget. Net tax collection stood at ₹23.26 lakh crore for the financial year ending March 2024.

Expenditure for the period amounted to ₹44.42 lakh crore, representing 98.9% of the RE. Additionally, CGA data indicates that the revenue deficit for FY24 was 2.6% of the GDP, while the effective revenue deficit was 1.6% of the GDP.

Experts have commented on the data, noting that the containment of the government’s fiscal deficit below the RE for FY24 was supported by higher-than-anticipated receipts and lower-than-estimated revenue spending. They also highlighted the marginal miss in capital expenditure.

A multi-disciplinary consulting firm emphasized that the lower fiscal deficit was primarily due to increased tax revenues. They credited the encouraging numbers to the efficiency of the Central Board of Direct Taxes (CBDT) and the Central Board of Indirect Taxes and Customs (CBIC), particularly acknowledging advancements in Artificial Intelligence implementation to uncover fraudulent transactions.

Looking ahead to the current financial year (2024-25), the government aims to achieve a fiscal deficit of 5.1% of the GDP or ₹16,85,494 crore. As per the Fiscal Responsibility & Budget Management (FRBM) Act, the target is to reduce the fiscal deficit to 4.5% in 2025-26.

During 2023-24, total receipts amounted to ₹27,88,872 crore, with tax revenue (net to Centre) at ₹23,26,524 crore, non-tax revenue at ₹4,01,888 crore, and non-debt capital receipts at ₹60,460 crore. A significant increase in the devolution of share of taxes to State governments was noted compared to the previous year.

Total expenditure incurred by the central government was ₹44,42,542 crore, with ₹34,94,036 crore on revenue account and ₹9,48,506 crore on capital account. Notable components of revenue expenditure include interest payments and major subsidies.

In April 2024, the fiscal deficit spiked to 12.5% of the Budget Estimate (BE) for 2024-25, amounting to ₹2.1 lakh crore. This surge was attributed to unexpected revenue spending, although higher dividend from the Reserve Bank of India (RBI) is expected to offset the deficit in the coming months. Overall, the fiscal outlook for FY25 seems favorable, bolstered by resilient GST collections and substantial dividend payout by the RBI.