Several ministries may not be able to utilise their full allocation for the year, providing a cushion to the finance ministry to meet the sharply higher requirement for food, fertiliser and petroleum subsidies. The higher-than-budgeted nominal gross domestic product (GDP) growth will also help deficit numbers.
“We are confident that we will meet the fiscal deficit target…It could even be better in percentage terms,” a top government official told ET. The government expects its gross tax revenues to exceed the Rs 27.6 lakh crore FY23 budget estimates by at least Rs 3-3.5 lakh crore.
Revenues have remained buoyant with both direct taxes and the Goods and Service Tax (GST) posting strong growth. The central excise collections have been muted, having borne the brunt of the tax cuts to cool down inflation, the official said. The windfall tax levied on domestic crude is also unlikely to yield much as the government is also losing commensurate revenues on profit petroleum.
Disinvestment is also expected to be less than the Rs 65,000 crore estimated for FY23 with privatisation of public sector banks unlikely to be taken up this financial year. The Single Nodal Account for the management of Central Sector Scheme (CSS) funds, a significant expenditure reform, has also reset the release of funds for welfare and development schemes.
Funds are released directly to the states based on utilisation, which has streamlined the process, but spending has been slow as the new system settled down. States also have substantial unspent amounts.
As a result, many ministries may not be able to utilise FY23 budgets fully, providing room for the finance ministry to meet demands elsewhere without derailing the fiscal deficit. The total expenditure budget for FY23 is Rs 39.4 lakh crore. In the first half, the government spent Rs 18.2 lakh crore, 46.2% of the full fiscal estimate. In contrast, the Centre collected 52.7% of the budgeted receipts in the first half of the fiscal.
The budget projected the nominal GDP growth for FY23 at 11.1%. The actual growth may be much higher given the high inflation. The nominal GDP growth in the first quarter of the fiscal year was 26.7%.