India Is Being Thrifty In Good News For Budget Gap Goal
By: Shaikha Al Falasi March 23rd, 2019.
India is spending less on food, fuel and fertilizer subsidies like the $2.6 trillion economies seeks to narrow its budget gap to the lowest in 11 years. However, the fiscal deficit goal of 3.3 percent of gross domestic product still faces risks from high crude oil prices and pressure on the government to spend more before general elections next year. India met the upwardly revised fiscal deficit target of 3.5 percent of GDP in 2017/18.
India reported a fiscal deficit of $62.57 billion for April-June, or 68.7 percent of the budgeted target for the current fiscal year, better than 80.8 percent a year ago.
The government's optimism to meet the fiscal target is due to higher tax collection in the first quarter. Driven by a sharp rise in indirect tax collections in April-June 2018, government's gross tax revenues jumped 22 percent in the quarter, while the net tax revenues rose faster at 34 percent. However, there was modest growth in direct tax as corporate tax collections were lower in the quarter compared with the year-ago figure.
Non-tax revenues were up 39.1 percent from that a year ago. The lower 6.6 percent growth in revenue spending has also allowed the government to rein in fiscal deficit even as capital spending grew at a brisk pace.