On Friday, the Ministry of Finance reported a fiscal deficit in the first half of FY22 of 35 percent of the budget estimate compared to 69.7 percent and 50.2 percent in the previous two corresponding periods of FY20 and FY21.
This is the lowest level for three years in terms of value. Experts expect the fiscal deficit to be below BE by 20-80 basis points. According to data from the Comptroller General of Accounts (CGA), the fiscal shortfall was more than $5.26-lakh crore due to better tax and non-tax collection and moderate expenditures in the six-month period.
Revenue expenditures in the first half grew by 6.33 percent compared to FY21 and 7.35 percent compared to FY2020. Devendra Kumar Pant, chief economist at India Ratings & Research, said the best measure of spending quality is non-interest revenue expenditure (NIRE).
“It is baffling that NIRE has barely grown compared to FY 2020 (0.2) and expanded 2.5 percent compared to FY 21. Encouragingly, capital expenditures appear to have picked up some speed as they were 1.22 times and 1.38 times in the first half of fiscal 2020 and the first half of fiscal year 21, respectively,” he said. Aditi Nayar, Chief Economist at ICRA, said, “We expect the total tax revenue of the Government of Iraq to exceed FY22 BE by at least ₹ 2-lakh crore. From this, the center will retain around INR 1.4 crore and Rs 60,000 crore will be shared with the states “.
Well presented by the primary sector
Meanwhile, the output of the eight core sectors – coal, crude oil, natural gas, refining products, fertilizers, steel, cement and electricity – grew by 4.4 percent in September 2021. This compares to the 0.6 percent output growth recorded in September 2020. The eight core industries grew 11.5 percent in cent in August of this year.
In the April-September period, the output growth of these eight sectors in total was 16.2 percent against a contraction of 14.5 percent in the same period last year. The eight primary industries account for 40.27 percent of the weight of the items in the Industrial Production Index (IIP).