India’s Fiscal Deficit In April-June Reaches 83% Of Budget Target

India’s fiscal deficit reached Rs 6.62 lakh crore, or 83.2% of the budgeted estimate in the quarter ended June as the government’s revenue remained stressed amid the disruptions caused by the coronavirus pandemic.

Tax Revenue

The government’s net tax revenue in the April-June period was Rs 2.69 lakh crore against Rs 4 lakh crore collected a year ago.

Of this, Rs 62,123 crore was collected as income tax against Rs 96,927 crore last year. About Rs 54,212 crore was collected as corporate tax, 23% lower than the amount collected last year.

• Direct tax collection was Rs 1.19 lakh crore, about Rs 51,460 crore lower than last year’s collection.
• Total indirect tax collected during the period was Rs 1.51 lakh crore.

The contraction in gross tax revenue has narrowed to 23% in June post a contraction of 41% in May, in line with some recovery in economic activity during the unlock phase, said Aditi Nayar, vice-president at ICRA Ltd.

But Nayar expects the government’s net tax revenue, non-tax revenue and disinvestment proceeds to together trail the budgeted target by more than Rs 6 lakh crore, highlighting the extent of the revenue shock being faced by it. Considering this along fiscal support announced under the 'Aatmanirbhar Bharat', and expenditure curbs, the fiscal deficit will surge to Rs 13 lakh crore in the ongoing financial year, Nayar said in a note.