The provisional estimates (Prov.) for FY2023 released by the Controller General of Accounts (CGA) revealed that Government of India’s (GoI’s) fiscal deficit was restricted at Rs. 17.3 trillion in the fiscal, marginally lower than the Rs. 17.6 trillion indicated in the revised estimates (RE). Higher-than-estimated revenue receipts and a small undershooting in revex in the fiscal, outweighed the shortfall in disinvestment receipts and a healthier-than-expected capex.
The gross tax revenues (GTR) grew by 12.7% to Rs. 30.5 trillion in FY2023 Prov. over FY2022 Actuals, with expansion in direct taxes (+16.0%) sharply outpacing that in indirect taxes (+5.6%). A bulk of the upside of Rs. 107 billion in GTR in FY2023 Prov. over the RE stemmed from income tax and customs duty collections.
In April 2023, the GoI’s fiscal deficit nearly doubled to Rs. 1.3 trillion in YoY terms, translating to 7.5% of the FY2024 Budget estimates (BE), with a contraction in revenue receipts (-13.6%), a healthy rise in revex (+15.2%), and a marginal dip in capex (-0.6%) amid unseasonal rains.
Against the embedded growth target of 10.1% in GTR in FY2024 BE (over FY2023 Prov.), such revenues saw a 6.1% YoY decline to Rs. 2.2 trillion in April 2023, led by corporation tax (-32%), which was partly offset by higher CGST (+26%), customs duty (+13%) and income tax (+8%) inflows.
Higher-than-budgeted dividend surplus transfer of Rs. 874.2 billion from the Reserve Bank of India (RBI) is likely to provide some cushion to meet any undershooting in other revenues streams or overshooting in expenses in FY2024, relative to respective budget estimates.
While fiscal concerns appear limited and the Monetary Policy Committee (MPC) seems unlikely to raise policy rates further in the immediate term, higher state government borrowings in the coming months could keep the 10-year G-sec yield in a range of 7.0-7.2% in the remainder of H1FY2024.
Be First to Comment