India’s FY24 Fiscal Deficit Seen Slightly Better Than Revised: India’s fiscal performance for the fiscal year ending March 2024 is poised to exceed government estimates, with the anticipated fiscal deficit likely to be better than the projected 17.35 trillion rupees ($207.81 billion). This positive outlook is driven by a surge in tax receipts and strengthened non-tax revenues, as revealed by a government source in New Delhi. The official announcement regarding the fiscal deficit for the fiscal year 2023/24 is scheduled for 31st May.
Revenue Surge
India witnessed a significant boost in income tax receipts during the fiscal year 2023/24, with a remarkable 17.7% year-on-year increase, totaling nearly $235 billion. This figure surpasses the government’s initial projection, indicating a robust revenue performance during the period.
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Targeted Fiscal Deficit
The government has set a target for the fiscal deficit to be 5.8% of GDP for the fiscal year 2023/24. However, it remains to be seen whether the actual fiscal deficit as a percentage of GDP will exceed this target.
Steady Spending Amid Elections
Despite the ongoing elections, India’s spending plans for April-June are unaffected, as confirmed by the government source. However, specific details about the impact of elections on spending were not disclosed.
Consideration for Securities Buyback
After the recent auction where government bonds worth 105.10 billion rupees were bought back, the government is contemplating the necessity of another round of securities buyback. This consideration arises following the central bank’s acceptance of falling short of the notified amount of 400 billion rupees.
Optimistic Outlook for Tax Revenues
India’s income tax receipts saw a substantial growth of 17.7% year-on-year, reaching nearly $235 billion in the fiscal year 2023/24. This figure surpassed the government’s earlier projection, signaling a robust revenue performance.
Government Targets Fiscal Deficit
The government has set its sights on a fiscal deficit equivalent to 5.8% of GDP for the 2023/24 financial year. However, the actual fiscal deficit as a percentage of GDP remains to be seen, as it might surpass the targeted figure.
Spending Unaffected by Elections
Despite the ongoing elections, India’s spending plans for April-June remain unaffected, according to a government source. However, the precise impact of the elections on spending has not been disclosed.
Consideration for Securities Buyback
Following a recent auction where government bonds worth 105.10 billion rupees were bought back, the government is considering the necessity of another round of securities buyback. This comes after the central bank’s acceptance fell short of the notified amount of 400 billion rupees.
Conclusion
India’s fiscal performance for the fiscal year 2023/24 ending March 2024 is poised to surpass government estimates, bolstered by increased tax receipts and non-tax revenues. With income tax receipts surging by 17.7% year-on-year, the fiscal deficit is anticipated to be better than the projected 17.35 trillion rupees. However, the actual figures and their impact on GDP remain to be seen, as the official announcement is awaited on 31st May.
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