Despite increased Capex, Government on the path of fiscal prudence says Anand Rathi - World News Network

New Delhi [India], September 2 (ANI): The central government is continuously moving on the path of fiscal prudence with the fiscal deficit of the government on July 24 declining to Rs 1.41 lakh crore as compared to Rs 1.54 lakh crore in the corresponding period last year, as per a report by Anand Rathi, a financial services company.
The report further highlights that the reduction in fiscal deficit is because of moderate growth in tax revenues and stable government spending. Over the first four months of the current fiscal year (April-July), the deficit stood at Rs 2.8 lakh crore, or 17.2 per cent of the estimated total, compared to Rs 6.1 lakh crore in the same period last year.
It added that the Government spending during these months was lower than last year, with capital expenditure down by 17.6 per cent year-on-year.
“In the first four months the fiscal deficit stood at Rs 2.8 trn (17.2 per cent of the estimate) compared to Rs 6.1 trn reported in the corresponding period last year” said the report.
The report also noted that the personal income tax collections continued to perform strongly in July 2024, growing by 64 per cent year-on-year as the deadline for annual tax returns approached. So far, these collections have reached 33 per cent of the budgeted target for FY25.
However, the corporate tax collections, which had briefly reversed a negative trend in June 2024, turned negative again, partly due to ongoing refunds.
The Indirect tax collections have improved, with customs duty revenues rising by up to 29 per cent year-on-year. Revenue from divestment has been stagnant, but non-tax revenues of the government have increased by 70 per cent year-on-year.
The report said “Indirect tax collection growth recovered with robust customs duty collections which posted 29 per cent y/y growth. The receipts from divestment are currently stagnant., while the non-tax revenues are up by 70 per cent y/y”
As per the report the total government spending in the first four months recovered to 27 per cent of the budgeted target. While monthly revenue expenditure decreased by 14 per cent year-on-year in July 2024, capital expenditure however rebounded with a 108 per cent year-on-year growth.
But, despite this rebound, capital spending by the government remains 18 per cent lower in the first four months of the fiscal year. The model code of conduct during the first two months of the year has slowed spending and the recovery after the elections has been limited, pending the full-year budget announcement.
The report says expenditure is expected to pick up as funds are released following the approval of the finance bill by the Parliament.
The strong growth in personal income tax collections and a record dividend payment of Rs 2.11 lakh crore by the RBI have improved the fiscal situation, potentially offsetting any shortfalls from divestment collections, which have yet to gain momentum.
With the strong revenue performance, the report suggests, the government is unlikely to alter its borrowing programme, as it plans to maintain robust spending to support the infrastructure and social schemes. (ANI)

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