BUBGET 2022: In Comparison to the Previous Two Years, the Fiscal Deficit for April to November 2021 Will Be Much Lower

“In the face of an evolving pandemic situation, the Government of India’s agile policy response differed from most other countries’ waterfall strategy of introducing front-loaded stimulus packages, which was adopted by most other countries in 2020,” says the Economic Survey 2021-22 tabled in Parliament today by Union Finance and Corporate Affairs Minister Smt. Nirmala Sitharaman. The Economic Survey points out that in the early stages of the epidemic, fiscal policy was concentrated on creating safety nets for the poor and vulnerable to protect them from the worst-case scenarios. With the resumption of economic activity, the fiscal reaction focused on boosting economic demand. With the loosening of movement and health-related constraints in Q3 2020-21, capital spending was pushed to encourage spending in industries that have the greatest economic impact. The following are the key findings of the Economic Survey 2021-22:

Fiscal Deficit

According to data released by the Controller General of Accounts for the period April to November 2021, the Central Government’s fiscal deficit at the end of November 2021 was 46.2 percent of the BE, compared to 135.1 percent for the same period in 2020-21 and 114.8 percent for the same period in 2019-20. During this time, both the fiscal and primary deficits were significantly lower than they had been in the preceding two years. During the months of April to November 2021, the primary deficit fell to about half of what it had been in April to November 2019. The fiscal deficit predicted for this year was more realistic because it brought some off-budget expenditures, such as FCI’s food subsidy obligations, into the budget allocation.

Revenue collection

When compared to the previous two years, revenue receipts have increased at a substantially faster rate during the current fiscal year (April to November 2021). This success can be attributed to significant increases in both tax and non-tax revenue. The Centre’s net tax revenue, which was expected to expand at an annual rate of 8.5 percent in 2021-22 BE compared to 2020-21 PA, increased by 64.9 percent from April to November 2021 over April to November 2020 and 51.2 percent from April to November 2019.

Direct Taxes

Personal income tax increased by 47.2 percent from April to November 2020 and by 29.2 percent from April to November 2019. From April to November 2020, corporate income tax increased by 90.4 percent, and by 22.5 percent from April to November 2019.

Indirect Taxes

Indirect tax receipts increased by 38.6% year over year in the first eight months of current fiscal year. Customs revenue collection increased by about 100% from April to November 2021 compared to April to November 2020 and by more than 65% compared to April to November 2019. During April to November 2021, excise duty revenue increased by 23.2 percent year over year. During April to November 2021, the GST collections for the Centre were 61.4 percent of BE. From April to December 2021, gross GST collections at the Centre and in the States totaled ‘10.74 lakh crore, up 61.5 percent from April to December 2020 and 33.7 percent from April to December 2019.

Non-tax revenue

Non-tax revenue collections increased by 79.5 percent year over year to November 2021. Dividends and earnings, which totaled ‘1.28 lakh crore vs BE of ‘1.04 lakh crore, drove the growth. The 0.99 lakh crore surplus transfer from the RBI to the Central Government was a major component of dividends and profits during this time period.

Expenditure

Between April and November 2021, the government’s overall expenditure climbed by 8.8%, reaching 59.6% of the Budget Estimate. While revenue spending increased by 8.2% in the first eight months of 2021-22 compared to the same time in 2020-21, non-interest revenue expenditure increased by 4.6% from April to November 2020.

Capital expenditure

Capital expenditure increased by 13.5 percent from April to November 2021, with an emphasis on infrastructure-intensive sectors such as roads and highways, railroads, and housing and urban affairs. Given the large YoY growth in capital spending recorded during the previous year’s similar period, this increase is especially significant. In addition, the Centre has put in place a number of incentives to encourage states to increase their capital expenditure.

New Public Sector Enterprise Policy and Asset Monetization Strategy

The government’s new Public Sector Enterprise Policy and Asset Monetization Strategy reaffirms its commitment to privatization and strategic disinvestment of public enterprises. The privatization of Air India was particularly significant, not only in terms of obtaining disinvestment funds, but also in terms of bolstering the privatization campaign.