RBI expresses doubts over govt meeting fiscal deficit targets

Mumbai: The Reserve Bank on Wednesday expressed doubts about the government's ability to contain fiscal deficit at the budgeted 6.8 per cent this fiscal year after it moved the second supplementary demand of grants worth Rs 3.73 lakh crore which came in spite of a massive 83 per cent jump in net tax revenue so far this year to Rs 10.53 lakh crore.

The government has budgeted for total expenditure of Rs 34.83 lakh crore or 6.8 per cent of GDP.

While the net tax revenue rose from Rs 5,75,697 crore in October 2020 to Rs 10,53,135 crore till October 2021, a growth of 82.93 per cent annualized, total expenditure rose only by 9.95 per cent, led by infra spending to Rs 18,26,725 crore from Rs 16,61,454 crore during the same period, the RBI said in the financial stability report.

While overall tax revenue front was boosted by a 55.79 per cent jump in gross tax collection to Rs 13,64,101 crore till October, up from Rs 8,75,591 crore in October 2020. Of the total, direct tax revenue soared 70.73 per cent to Rs 6,59,066 crore from Rs 3,86,025 crore and indirect tax revenue rose 45.01 per cent from Rs 4,45,673 crore to Rs 6,46,283 crore.

Till October, all the deficit indicators of the centre (gross fiscal deficit, primary deficit and revenue deficit) showed improvement on-year as well as from their pre-pandemic levels. Gross tax revenues have been buoyant, with robust growth under all major heads, with direct taxes in the lead. Total expenditure grew 9.9 per cent, the noteworthy feature being expansion of capital outlay by 28.3 per cent, led by roads and highways, notes the report.