Central government finances

• Progress in fiscal consolidation.
• The fiscal deficit for the first half of the current year is only marginally higher than the deficit in the corresponding period of the previous year.
• While the revenue and expenditure trends in the first half of the current year have been more or less satisfactory, the deficient monsoon raises concerns about the outturn for the current year, unless corrective actions are initiated.

Revenue performance in the first half of the current year

• Revenue growth lower than the budgeted growth of 23-24 per cent

• Growth in gross tax revenue in the first six months of the current year was 16.9 per cent.
• Direct tax collections in the first half were 21.5 per cent higher than that in the corresponding period of the previous year.
• The growth in the first half of the current year is, nevertheless, lower than the budgeted 23-24 per cent for 2002-03 in relation to the revised estimates for the previous year.
• Net tax revenue to the Centre grew at 27 per cent over the corresponding period of the previous year.
• The revenue shortfall in the previous year has resulted in a lower assignment to States.
• Revenue receipts (net to Centre), which include tax and non-tax revenues, have increased by 15.9 per cent in the first half of the current year compared to the same period of the previous year. Under capital receipts, disinvestment receipts are estimated at Rs.3, 022 crore in the first half.
• Tax revenue (net to Centre), as a proportion of GDP, is budgeted at 6.8 per cent in the current year. This looks very ambitious.
• During the first half of the current year, the receipts from non-tax revenue were 1.7 per cent lower than the figure observed in the corresponding period of the previous year.
• Non-debt capital receipts, which are budgeted to grow by 47 per cent in 2002-03, performed satisfactorily and registered a growth of 50.2 per cent.

Expenditure trends in the first half of the current year

• The first half of the current year witnessed a 12 per cent growth in aggregate expenditure compared with the corresponding period of the previous year.
• Non-plan revenue expenditure increased by 14.4 per cent
• Capital expenditure (plan and non-plan) rose by 3.6 per cent.

Borrowing programme for the current year

• According to the Budget, the total borrowing requirement consisting of internal debt, external assistance, securities against small savings collections, and public account accruals, is Rs.296, 679 crore for the current year.
• An amount of Rs.110, 032 crore of gross market borrowing, constituting 77 per cent of the budgeted amount, have been raised this year up to October 25, 2002.
• Relative to the first half of the previous year, in the first half of the current financial year, market loans and short-term borrowing are higher by Rs.27, 334 crore, while treasury bills are lower by Rs. 20,101 crore.

• A system of releasing a calendar for the issuance of Government of India dated securities was introduced in the current year to impart transparency and to help investors in advance planning. The calendar for the first half announced on March 27, 2002 was adhered to except for minor changes. The calendar for the second half was announced on September 18, 2002. Floating bonds and bonds with call and put options, to offer variety and enable investors to hedge interest rate risks, have also been issued during the current year.

Debt and deficit for the current year

• During the first half of the current year, the revenue deficit has increased by 9.1 per cent compared to the corresponding figure in the first half of the previous year, and constituted 49.9 per cent of the budgeted revenue deficit estimate for the current year. This is a welcome change from last year, when the revenue deficit increased by 65.8 per cent over the first half of 2000-01, and constituted 55.3 per cent of the budgeted revenue deficit estimate for 2001-02.
• The improved performance on revenue deficit is also reflected in the behaviour of the fiscal deficit this year. The fiscal deficit increased by 0.8 per cent in the first half of the current year over the first half of the previous year, and constituted 42.6 per cent of the budgeted fiscal deficit of the current year. In April-September, 2001, the fiscal deficit had risen by 34.4 per cent over the corresponding period of the previous year, and constituted 49.2 per cent of the budgeted fiscal deficit estimate for 2001-02.
• Fiscal deficit of the Central Government as a proportion of GDP, based on the provisional data, is 5.9 per cent for 2001-02, compared with the revised estimate of 5.7 per cent. The fiscal deficit is budgeted at 5.3 per cent of GDP for 2002-03. The revenue deficit and primary deficit budgeted for the current year is 3.8 per cent and 0.7 per cent of GDP respectively, compared to the corresponding figures of 4.2 per cent and 1.4 per cent respectively for 2001-02.
• The internal debt budgeted for 2002-03 is Rs.253, 023 crore. Up to September 2002, the internal debt raised is Rs.188, 549 crore, of which Rs.120, 695 crore have been used for repaying past debt, and the balance of Rs.67, 854 crore utilized for financing other expenditure during the current year.

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