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Central Govt: Improving fiscal health?

Oct 1, 2001

The central government’s fiscal performance in the first five months of the year is disappointing in the least. Fiscal deficit, a key indicator of the government's profligacy, has been put at Rs 560 bn (48% of budgeted). However, a closer look at the government's performance in August paints an interesting picture. A turnaround cannot be termed as a trend. And this is what needs to be kept in mind while evaluating the government’s performance for the month of August. The Central Government, which has been consistently posting a widening of the deficit since the start of the fiscal year, posted a fiscal surplus of Rs 25 bn in August!

  • More on the government’s fiscal health

    How did the government achieve this? First, the government managed to limit the increase in non-plan expenditure to just 2% during the month. Second, plan expenditure, unfortunately though, declined by over 5%. These two developments resulted in a near zero growth in total expenditure in August.

  • More on the government’s performance on the expenditure front

    On the revenue front, the growth in net tax revenues continued to disappoint. However, non tax revenues recorded a sharp growth, resulting in an over 8% growth in revenues in August. This coupled with a Rs 24 inflow from recovery of debt, resulted in a the government posting a fiscal surplus.

  • More on the government’s performance on the revenue front

    The fiscal position of the government continues to be precarious, notwithstanding the improvement in the month of August. There is an urgent need for the government to take stern measure to curtail expenditure and shore up revenues. However, in view of the global slowdown, achieving these objectives will become even more difficult.


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