India’s budget deficit at end-November reaches 135.1% of FY21 target

The Union government budget deficit soared to Rs 10.75 lakh crore, or 135.1% of the 2020-21 budget forecast (BE), at the end of November 2020, mainly due to poor revenue realization due to the disruption of business activities amid the Coronavirus pandemic.

The budget deficit at the end of November 2019 was 114.8% from 2019-20 BE.

In absolute terms, the budget deficit stood at Rs 10.75.507 crore at the end of November 2020, according to the latest data released by the Comptroller General (CGA).

The lockdown imposed to curb the spread of the coronavirus has had a significant impact on business operations and, in turn, has contributed to the slow realization of revenues.

The budget deficit, or the gap between expenditure and revenue, had exceeded the annual target by July of this year.

Total government revenue stood at Rs 8.30,851 crore (37% of BE 2020-21) until the end of November 2020. This included Rs 6,88,430 crore in tax revenue (net in center), Rs 1 , 24,280 crore of non-tax revenue and Rs 18,141 crore of non-debt capital revenue. Non-debt capital receipts include loan collection and divestment proceeds.

Tax revenue collection was 42.1% BE from 2020-2021, compared to 45.5% BE (2019-20) in the corresponding period a year ago. Non-tax revenue represented 32.3 percent of BE. In the corresponding period of the last financial year it was 74.3% of BE 2019-20.

In the corresponding period of the previous fiscal year, the total revenue amounted to 48.6% of 2019-20 BE.

According to the data, over Rs 3.34 lakh crore was transferred to state governments as devolution of tax share by Indian government until November 2020.

CGA data indicated that the total expenditure incurred by the government amounted to Rs 19,06,358 crore or 63 percent BE. Of the total expenditure, Rs 16.65,200 crore was on the income account and Rs 2.41,158 crore on the capital account.

He added that out of the total revenue expenditure, over Rs 3.83 lakh crore was due to interest payments and Rs 2.02,119 crore for major grants.

For this fiscal year, the government had set the budget deficit at Rs 7.96 lakh crore or 3.5% of GDP in the Union budget, presented by Minister of Finance Nirmala Sitharaman in February 2020. These figures must however be revised significantly in view of the economic disruptions caused by the coronavirus pandemic.

The budget deficit had climbed to its highest level in seven years, 4.6% of gross domestic product in 2019-2020, mainly due to poor revenue realization.