For the last three years, the government’s budget estimates would go off track within the initial months of the financial year. In 2020, the Covid outbreak resulted in the lockdown, after which came the second wave. In 2022 and 2023, the government has had to tackle the fallout of Russia’s invasion of Ukraine.
Over four months into the current financial year, finance secretary T V Somanathan is drawing comfort from the revenue numbers and spending so far. ‘We are reasonably confident that the revenue, expenditure and fiscal deficit assumptions are accurate. We will end the year with a fiscal deficit of 5.9% of GDP,’ he told TOI.
When it comes to revenue, the run rate has been ahead of the asking rate, so far at least. In other words, the growth rate in tax collections – both in direct taxes and GST – is higher than the budget target.
While there is an expectation that disinvestment receipts will be around Rs 25,000 crore lower than the budget estimate of Rs 61,000 crore, Somanathan did not comment on it. All he was willing to say is that dividend from RBI and banks will be higher than the budgeted level. RBI has already announced a dividend payout of Rs 87,400 crore, 1.8 times higher than what the government was expecting.
Somanathan, however, stuck to the fiscal deficit target. After all, PM Narendra Modi just announced a new interest subsidy scheme for low-cost housing and Union cabinet cleared an additional spend of Rs 13,000 crore allocation for PM Vishwakarma Kaushal Samman or PM-Vikas. Even if fertilizer subsidy, budgeted at over Rs 2.2 lakh crore, is reined in, experts believe that the government may announce some pre-election schemes. Unlike last year, however, there may not be additional allocation for roads or railways, which have stepped up capex.
When asked about inflation, the finance secretary said that the steps taken by the government are helping cool down prices. ‘The supply problems due to Ukraine have caused tightness globally. We have made some trade policy interventions to restrict exports and liberalize imports which are helping… compared to the rest of the world, India is not doing badly,’ he said, adding that the rise in vegetable prices was seasonal and moderation has begun in certain products.
Somanathan also ruled out additional allocations for new production linked incentive (PLI) schemes such as specialty chemicals, footwear, or toys. ‘They will be within the existing envelope of PLI and there can be some reallocation of savings,’ he said. The government has provided just under Rs 2 lakh crore for these schemes meant to promote domestic manufacturing for local and international markets.
