India’s fiscal deficit at $16.25 in Q1 ’24

India’s fiscal deficit for the first quarter of the current financial year (April-June) stood at 1.36 trillion rupees ($16.25 billion), representing 8.1 per cent of the full-year estimate, according to government data released on Wednesday.

Net tax receipts during this period amounted to 5.5 trillion rupees, reaching 21 per cent of the annual target and surpassing the previous year’s figure of 4.34 trillion rupees.

Total government expenditure was recorded at 9.7 trillion rupees, or approximately 20.4 per cent of the annual goal, marginally lower than the 10.51 trillion rupees spent in the same period of the previous year.

The government’s spending was relatively restrained in the first quarter due to the general elections held earlier this year.

Capital expenditure, focused on infrastructure development, reached 1.81 trillion rupees, accounting for 16.3 per cent of the annual target, a decline from the 2.78 trillion rupees spent in the corresponding period of the previous year.

In a recent move, the Indian government lowered its fiscal deficit target for the current financial year to 4.9 per cent of GDP, down from the 5.1 per cent projected in the interim budget.

This adjustment was made possible by a surplus transfer from the central bank and robust tax revenues.

The target for the fiscal deficit was reduced, even though there was a higher allocation in the federal budget for job creation and regions controlled by key allies of Prime Minister Narendra Modi in the newly formed coalition government.

The country’s budget deficit was 5.6 per cent of GDP in the last fiscal year. India plans to shift away from setting fiscal deficit targets after 2026 and will instead focus on using the government debt-to-GDP ratio as the basis for fiscal policy.

Attribution: Reuters