Govt can miss FY22 fiscal deficit target on higher expenditure

The government is unlikely to meet the fiscal deficit target of 6.8 percent set for the current financial year and a small slippage is likely, sources informed CNBC-TV18.

The reasons for the slippage is the ballooning expenditure of the government primarily on food and fertiliser subsidies, some fiscal impact of government missing the disinvestment aim of Rs 1.75 lakh crore by a wide margin and excise duty cuts on petrol and diesel.

Reduction in excise duty on petrol and diesel had an impact on value-added tax (VAT) because VAT is also levied on excise duty. So the prices have come down.

Additionally, the government is aiming to settle the outstanding liabilities of Air India to banks in the current FY itself , which is estimated at approximately Rs 44,000 crore.

While the government is already committed to additional fertiliser subsidy of Rs 40,000 crore in the current fiscal , further outgoes of Rs 15,000 crore- Rs 20,000 crore cannot be ruled out .

However, given the strong tax revenues this fiscal , the slippage on fiscal deficit is likely to be within a 0.5 percent range, sources said.

Meanwhile, the Union government's fiscal deficit worked out to be Rs 5.26 lakh crore or 35 percent of the budget estimates at the end of September 2021, as per the data released by the Controller General of Accounts (CGA).

The deficit figures in the current fiscal appeared much better than the previous financial year when it had soared to 114.8 percent of the estimates mainly on account of a jump in expenditure to deal with the COVID-19 pandemic.

The fiscal deficit for 2020-21 was 9.3 percent of the gross domestic product (GDP), better than 9.5 percent projected in the revised estimates in the budget in February.