India's fiscal deficit rose to a staggering 135 per cent of the Union Budget 20-21 target at the end of November, revealed the Controller General of Accounts data released on Thursday.
The fiscal deficit is defined as the gap between government expenditure and earnings or revenue in the form of direct and indirect tax collections. It is expressed in terms of percentage of Gross Domestic Product.
The fiscal deficit stood at ₹10,75,507 crore against the target of ₹8 lakh crore in eight months from April-November 2020.
The direct tax revenue for the financial year 2020-21 stood at 42.1 per cent of the budget estimates, 3. 4 per cent lower than 2019-20 during the same period. The non-tax revenue was 32.3 per cent of the budget estimate, it was 74.3 per cent of budget estimate in 2019-20 during the same period, India Today reported.
The government's capital expenditure was lower than in the last financial year. However, in November the expenditure recorded a 12.7% jump.
Experts predict that if the government goes ahead with the Atmanirbhar Bharat packages, the fiscal deficit will rise to 9% of the GDP or around ₹17-18 lakh crore.
Aditi Nayar, chief economist at rating agency ICRA said, "Fiscal deficit for the year will reach ₹14.5 lakh crore or 7.5 per cent of its nominal GDP estimate. Although, the sustenance of the trend in public spending will boost the Indian economy exit the recession in the coming quarter."
To control the fiscal deficit the government tries to control its spending. But that too can be done to a limit. The direct effect of the cut in expenditure was seen last year when the government halted the increase on dearness allowances of government employees and pensioners.
"With four months to go in the year, a lot depends on how the government manages its expenditure," Madan Sabnavis, chief economist at CARE Rating told The Hindu.