March may see gross tax revenue collections touch 8%

India's fiscal deficit jumped to Rs. 15 trillion or 86.5 per cent of the year’s revised estimate in April-February, from Rs 11.0 trillion up to February-end thus exceeding the Rs. 14.5 trillion recorded in the year-ago period, of the target for the entire financial year. The fiscal deficit in the same period a year ago stood at Rs. 14.53 lakh crore. The surge in the GoI's fiscal deficit in February at Rs. four trillion (2.6 trillion) can be partly attributed to the higher tax devolution released during the month that stood at Rs. 2.1 trillion (Rs. 1.4 trillion), which led to a decline in the revenue receipts and net tax revenues in that month. In April-February, the net tax revenues rose by seven per cent, non-tax revenues expanded by 45 per cent boosted by the RBI dividend, a modest one per cent growth in revenue expenditure and a robust 36.5 per cent YoY expansion in capex.

The GoI has released Rs. 10.3 trillion as tax devolution to states in the current fiscal so far or by end-February, leaving Rs. 0.7 billion for disbursal to the states to meet the target tax devolution of Rs. 11 trillion indicated in the outgoing fiscal’s revised estimate by the GoI, as per Icra, half of the release in March in the previous year. In her Interim Union Budget announcement, Finance Minister Nirmala Sitharaman had said that the government has narrowed its fiscal deficit aim for FY24 by 10 basis points to 5.8 per cent of gross domestic product, which they aim to bring down to 5.1 per cent in the next financial year. The total expenditure during April-February was Rs. 37.47 lakh crore, or about 83 per cent of the annual goal, against Rs. 34.94 lakh crore seen a year earlier. On the capital expenditure front, meant to build physical infrastructure, the government incurred an expenditure of Rs. 8.05 lakh crore in April-February, thus achieving 84.8 per cent of its target for the entire fiscal. This was higher than the Rs. 5.90 lakh crore incurred in the same period a year ago.

The government's net tax revenues for the period under review was Rs. 18.5 lakh crore, or 79.6 per cent of the overall target. The figure stood at Rs. 17.32 lakh crore in the same period of the previous fiscal. Meanwhile, non-tax revenue figured at Rs. 3.6 lakh crore, or 95.9 per cent of the overall target. The total receipts for the April-February period were Rs. 22.5 lakh crore, or 81.5 per cent of the overall target. India's revenue gap figured at Rs. 7.32 lakh crore for the period, 87 per cent of the year’s target.

The GoI's gross tax revenues need to record an eight per cent growth in the last month of the outgoing fiscal to meet the revised estimate for the year, which seems achievable.