At Rs 40,072 cr, govt's external financing jumps 5 times till Aug: Report

Despite the massive spike in fiscal deficit and market borrowing, capital expenditure has declined by 1.3 per cent during the reporting period

External financing of the government has jumped nearly five times over the previous year's figure at Rs 40,072 crore during the first five months of the current fiscal, according to an analysis of the fiscal deficit numbers by Care Ratings.

At Rs 40,072 crore, the external financing of government debt is a whopping 867 per cent of the budget estimate for the full year, the agency said.

This is around 5 per cent of the total borrowings as 95 per cent of deficit financing is met through domestic sources, mainly market borrowings, it added.

According to data released by the Controller General of Accounts earlier on Wednesday, fiscal deficit during April-August stood at 109.3 per cent of the annual target. This was 57 per cent higher than the corresponding period last year.

In absolute terms, fiscal deficit -- which is the gap between expenditure and revenue -- stood at Rs 8,70,347 crore.

The government had pegged fiscal deficit for 2020-21 at Rs 7.96 trillion or 3.5 per cent of the GDP in the budget in February.

Later, following the Covid-19 outbreak, the government had increased its market borrowing to Rs 12 trillion, which is also likely to overshoot and analysts peg fiscal deficit for the full year at over 9 per cent of GDP.

Despite the massive spike in fiscal deficit and market borrowing, capital expenditure has declined by 1.3 per cent during the reporting period.

In view of widening fiscal deficit, government has increased market borrowings to Rs 9.7 trillion, which is 141 per cent higher than the same period last year, as well as external financing, which is a little over five times than last year, Care Ratings said.

Total receipts, which are 16 per cent of budget estimate, have fallen by 39 per cent during April-August compared with the corresponding period last year.

Of this, revenue receipts, which are 18 per cent of the budget estimate, have declined by nearly 39 per cent, it said.

Disinvestment proceeds have been quite lackluster at a paltry Rs 28.74 crore as against the budgeted Rs 2.1 trillion.

Total expenditure has increased 6.2 per cent, led by increase in revenue expenditure, which accounted for 89 per cent of the expenditure and grew 7 per cent year-on-year.

Capital expenditure declined by 1.3 per cent from last year. Compared to budget estimates, only 33 per cent of the capex has been undertaken, lower than 40 per cent of budget estimate last year, it said.

Tax revenue declined by 29.7 per cent from Rs 4,04,580 crore to Rs 2,84,495 crore.

Of this, income tax fell 28.9 per cent from Rs 1,65,500 crore to Rs 1,17,738 crore, corporate tax plunged 41.8 per cent to Rs 64,715 crore from Rs 1,11,166 crore, custom duties declined 47.9 per cent to Rs 32,302 crore from Rs 62,031 crore, CGST fell 40.2 per cent to 1,25,308 crore and GST compensation cess declined 28.9 per cent to Rs 28,154 crore.

The only revenue head that grew was excise duties, which jumped 32 per cent from Rs 76,032 crore to Rs 1,00,398 crore.

Non-tax revenue fell to Rs 86,147 crore, down by 56.6 per cent or Rs 1,98,621 crore.

Even interest receipts declined by 18.9 per cent to Rs 4,070 crore and dividends and profits plunged 60.2 per cent to Rs 59,578 crore.

Total revenue receipts declined 38.6 per cent to Rs 3,70,642 crore from Rs 6,03,201 crore.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel