Fiscal deficit zooms to Rs1,27,000 cr in April as Modi boosts infra spending

The Narendra Modi government accumulated a fiscal deficit of Rs1,27,000 crore in the first month of the 2015-16 financial year, using up 23 per cent of the budget provision for the full fiscal, as the government increased spending on infrastructure to pump up growth.

The government increased capital spending to Rs35,160 crore in April, the first month of fiscal 2015-16, a 50 per cent increase from a year ago, data released by the government on Friday showed.

Fiscal deficit during April last fiscal was 21.4 per cent of budget estimates while the fiscal deficit - the gap between expenditure and revenue - for the whole fiscal has been pegged at Rs5,55,000 crore.

Modi, who has vowed to raise infrastructure spending by an additional Rs70,000 crore in the current fiscal, however, is faced with the arduous task of keeping fiscal deficit well below 3.9 per cent of the country's gross domestic product (GDP).

Finance minister Arun Jaitley has vowed to stick to his predecessor P Chidambaram's deficit target of 4 per cent in 2014-15 and 3.9 per cent in 2015-16.

The Modi government has ramped up spending on roads, railways and rural infrastructure in April to boost economic growth, after a Rs1,21,120-crore spending cut in the 2014-15 fiscal brought public investment to a halt.

The government allocated Rs3,289 crore for railways, Rs5,830 crore for roads and Rs17,500 crore for rural projects in the first month of the current fiscal.

For 2015-16, the government has put a fiscal deficit target of 3.9 per cent while the fiscal deficit for 2014-15 was Rs5,01,000 crore or 4 per cent of GDP, down from 4.1 per cent pegged in the revised estimate.

The revenue deficit was lower at 2.8 per cent, beating the budget target of 2.9 per cent for the last fiscal.

Finance minister Arun Jaitley expects direct tax collection to improve by 14-15 per cent in the current fiscal, helping to further improve upon the fiscal deficit target of 3.9 per cent.

However, he had said that the government would have to increase spending on social sector schemes although improving fiscal deficit was a desirable goal.

The total expenditure of the government during April was Rs1,54,000 crore or 8.7 per cent of the estimates for the entire year, data released by the Controller and Accounts General revealed.

Of this, plan spending was Rs35,160 crore while non-plan spending stood at Rs1,19,457 crore.

Revenue collection in April was Rs25,313 crore or 2.2 per cent of the estimate against 6.6 per cent of the estimates in 2014-15.

The revenue deficit during April 2015 stood at Rs1,03,095 crore or 26.1 per cent of the estimates.

Total receipts (from revenue and non-debt capital) of the government during the two months was Rs27,094 crore or 2.2 per cent of the total deficit.