The central government has witnessed growth in revenue receipts during the first five months (April-August) of financial year 2023-24, as per data released by the Controller General of Accounts.
Total receipts of the government in April-August 2023 stood at Rs 10.3 trillion, a 21.3% increase over the same period last year. This accounts for 38.8% of the full year target, higher than 38.2% achieved in April-August 2022.
The growth in receipts was powered by a massive 553% year-on-year rise in net tax revenues in August 2023. This spike came on the back of a 374.8% increase in direct tax collections, as corporate advance tax payments saw robust growth. Income tax collections also rose, boosted by increasing salaried incomes.
Indirect tax collections picked up to 11.1% growth in August 2023, compared to just 4.4% in July 2023. Higher goods and services tax (GST) and custom duty collections offset the 18.2% decline in excise duties.
For the cumulative April-August period, direct tax collections were up 78% year-on-year. Meanwhile, indirect taxes rose at a slower 13.4%, although picking up from July’s growth. The relatively modest indirect tax growth was led by GST collections rising 16.7% during April-August 2023.
On the expenditure side, growth in overall spending moderated to 20.3% in April-August 2023, led by slower 16.7% growth in revenue expenditure. Capital spending jumped 45% during this period, signaling the government’s focus on boosting infrastructure.
Deficit Funding
Alongside higher revenues, slower revenue expenditure — costs such as salaries — allowed the Centre to contain its fiscal deficit.
The fiscal deficit of the Centre stood at Rs 6.4 trillion in April-August 2023, equivalent to 36% of the budget estimate (BE) for full year FY2024. But this was higher than the 32.6% of BE achieved in the same period last fiscal year FY2023.
In absolute terms, fiscal deficit increased from Rs 5.4 trillion in April-August 2022, due to the 14.4% rise in the BE for FY2024 to Rs 17.8 trillion, compared to Rs 15.6 trillion for FY2023.
Fiscal deficit refers to the gap between the government’s income and expenditure. This is usually met by borrowing from the markets — usually by issuing government bonds.
Economists welcomed the improvement in fiscal metrics, but cautioned about risks to the outlook. “While tax buoyancy is encouraging, we need to see if it sustains over the full year. Pressure on subsidies, welfare spending and interest costs could emerge later,” pointed out an economist based in Mumbai.