Transitional impact of GST and poor agricultural situation in 2018-19 fiscal led to the 0.1 percentage point drift in fiscal deficit to 3.4 per cent, said the Finance Ministry’s Statement on half yearly review of the trends in receipts and expenditure in relation to the budget at the end of the financial year 2018-19.
Fiscal deficit (FD) was estimated Rs 6,24,276 crore (3.3 per cent of projected GDP) in BE 2018-19. It was recalibrated to Rs 6,34,398 crore (3.4 per cent of GDP) at RE stage.
The minor deviation of 0.1 percentage points was necessary due to transitional impact of GST and the agricultural situation in the country. Against the revised target, the actual fiscal deficit for 2018-19 was Rs 6,45,367 crore (prov.), which works out to 3.4 per cent of GDP, the statement on trends in receipts and expenditure said.
The structural changes in the indirect taxation regime that was implemented beginning 1st July 2017 was in the process of stabilisation in FY 2018-19. FY 2018-19 was the first full financial year after the introduction of the GST regime.
Additionally, farmers needed support to manage the changes in the agricultural economy that were underway. Government needed to play a critical and an effectively large role by providing support to farmers to manage these changes to minimise distress in the sector.
These reasons necessitated a minor deviation in the fiscal deficit target of the government. In 2018-19, fiscal deficit was budgeted at 3.3 per cent of GDP. This was revised to 3.4 per cent in RE 2018-19, it said.
Though the ministry did not name the farmers’ support scheme , it was PM Kisan Scheme under which the government had announced income support for small farmers and allocation for the agriculture ministry rose from Rs 57,600 crore in 2018-19 (BE) to Rs 1.41 trillion in 2019-20.
Pradhan Mantri Kisan Samman Nidhi, or PM-Kisan scheme, was aimed at helping 120 million farmer families live with respect, besides helping pay for cultivation costs and reducing debts. The scheme costed Rs 20,000 crore in 2018-19, and Rs 75,000 crore in 2019-20.
Small and marginal farmers who own less than five acres of land will receive three instalments of Rs 2,000 each every year or Rs 6,000 a year.
The revisions in FD targets were made under the provisions of Section 4 (2) of the FRBM Act, 2003. As per the provisional estimates of Annual National Income released by the Central Statistics Office, the growth in Gross Domestic Product (GDP) at constant (2011-12) prices in 2018-19 is estimated at 6.8 per cent compared to GDP growth in 2017-18 0f 7.2 per cent.
The year-on-year inflation based on the Wholesale Price Index (WPI) during H2 of 2018-19 was 3.7 per cent as compared to 3.3 per cent during the corresponding period of the previous year and 4.9 per cent in H1 of 2018-19.
Gross tax revenue receipts were Rs 20,80,203 crore (prov.) which was about 92.5 per cent of RE and registered a growth of about 8.4 per cent over gross tax revenue receipts in 2017-18.
Receipts from non-tax revenue in 2018-19 were Rs 2,46,219 crore, higher by Rs 58,301 crore compared to previous year.
Revenue receipts of the centre were Rs 15,63,170 crore (prov.), which is 9.3 per cent higher than the previous year.
The non-debt capital receipts were 14.5 percent lower than the previous year. Total net receipts of the Centre (including non-debt capital receipts) were Rs 16,66,054 crore which were about 7.4 per cent higher than receipts of previous financial year.
Total expenditure incurred during the year 2018-19 was Rs 23,11,422 crore (prov.), which grew by 7.9 per cent over the previous year.
Revenue expenditure, which constituted over 86.9 per cent of total expenditure (COPPY – 87.7 per cent), was Rs 20,08,463 crore (prov.).
Capital expenditure was Rs 3,02,959 crore (prov.) and it registered an increase of 15.4 percent over the previous year.
Total receipts excluding borrowings covered about 72.1 per cent of total expenditure resulting in a fiscal deficit of Rs 6,45,367 crore (prov.) in 2018-19 indicating that fiscal deficit was restricted to 3.4 per cent of GDP.