Fiscal balance turns surplus after 8 years

[Skull and Bones]

For the first time in 8 years, India’s fiscal balance turned from deficit to surplus in the month of August, the latest data from the Controller-General of Accounts (CGA) show. The fiscal deficit, the excess of the Centre’s expenditure over its revenues, was (-) Rs. 15,808 crore in August.

The negative figure indicates surplus of revenues over expenditure. In contrast, the Centre ran up a fiscal deficit of Rs. 73,005 crore in August 2014.

Surge in revenue

A sharp surge in the Centre’s revenue receipts as well as a steep decline in its total expenditures made the fiscal surplus possible.

The total revenue was Rs. 1,47,022 crore in August against Rs. 71,578 crore in July. In contrast, the total expenditure in August was Rs. 1,31,214 crore against Rs. 1,69,986 crore in July.

August’s surplus, though, is not wide enough to offset the Centre’s fiscal deficit year to date.

During the first five months of the current financial year from April to August, cumulatively its fiscal deficit was Rs. 3.69 lakh crore, which is lower than the Rs. 3.97 lakh crore in the corresponding period last year.

The cumulative fiscal deficit, at 66 per cent of the full-year budget target, is one of the lowest in four years. Last year, the Centre had reached 75 per cent of its full-year budget target by the end of August. The improvement this year is despite a lower realisation of revenues from the disinvestment route. Finance Minister Arun Jaitley had laid down in the budget a target of 3.9 per cent of GDP for this year’s fiscal deficit.

The healthy 22.8 per cent growth in gross tax revenues so far this year along with the 12 per cent reduction in the subsidy outgo have contributed to the improvement in the Centre’s fiscal position. Also, the Centre’s total receipts are significantly higher this year on the back of the Rs. 66,000-crore dividend from the RBI , which is the highest in its 80-year history and 22 per cent more than it paid last year.

Fiscal balance turns surplus after 8 years - The Hindu

 

[anant_s]

Great news but this was on expected lines.
Government now is in a good position to start spending cycle in infrastructure sector which coupled with recent interest rate reduction by RBI will attract private parties to follow government.
Now that things have started to look up, it is important to remember where NDA government went wrong during economic boom period.
Government MUST NOT indulge in wasteful spending (like populist schemes) and rather encourage timely completion of projects. This will not only allow more private parties to put in their money with quick returns but also avoid generation of bad loans in banking system. Recent interviews of FM shows how serious government is in improving bank finance.
secondly i believe here Make in India can be leveraged to kick start manufacturing cycle and foreign equity be encouraged to come to India for investment in sectors identified by government. With private and foreign funding coming in these sectors, government can reduce its own spending or spend the money somewhere else, reducing borrowing and further help in cutting deficit.
Third, improving the overall subsidy profile (direct transfer of subsidy linked with AADHAR) to has played a big role in eliminating wrong doings in subsidy and improving finances.
Continued fiscal discipline is the key for not only government's finances but also for overall economic environment in country as a whole.

 

[Ankit Kumar 001]

Good. Now work towards taxation reforms.
The transport ministry under Nitin Gadkari, power under Piyush Goyal and Railways are performing well. Need to boost them. Agriculture is being ignored, it should be taken care of.