This report covers the overall fiscal deficit suffered by the Indian economy due to COVID19.
The report covers the comparison of previous tax receipts since 2016 and compares it on a Y-o-Y the fall and growth in this phase,upto presently available government data.
The report also five a picture of "What if" no COVID situation had happened on a rough estimate.
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India Fiscal Deficit Overview Quarter One Report
1. 1
The Fiscal Landslide (Pre & Post Corona)
First Quarter’2020 Edition
India's fiscal deficit of FY 2020-21
already covers 83% of the annual
budget estimate in the Q1, the
lockdown period due to COVID19.
Budgeted Fiscal Deficit 7,96,337
Total Fiscal Deficit Q1’20 6,62,363
April : ₹279,512 (35%)
May : ₹186,831 (23%)
June : ₹196,020 (25%)
Fiscal Picture
UNION GOVERNMENT ACCOUNTS
2
0
2
0
SNo. Particulars
Budget
Estimates
2020-21
Actuals for Q1
2020
% of Actuals
to Estimates
1 Revenue Receipts 2,020,926 150,008 7.42%
2 Non-Debt Capital Receipts 224,967 3,573 1.59%
3 Total Receipts (1+4) 2,245,893 153,581 6.84%
4 Revenue Expenditure 2,630,221 727,671 27.67%
6 Capital Expenditure 412,009 88,273 21.43%
7 Total Expenditure (4+6) 3,042,230 815,944 26.82%
8 Fiscal Deficit (7-3) 796,337 662,363 83.18%
9 Revenue Deficit (4-1) 609,295 577,663 94.81%
10 Primary Deficit (8-5) 88,134 501,870 569.44%
Revenue Receipts
Revenue receipts of government has two constituents only “Tax Revenue (Net)”
& “Non-Tax Revenue”, the snapshot for the months is as follows:
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rahman.shuja@yahoo.in
1
2. 2
1. April’20: The current standing revenue
for the month fell by 249% Y-o-Y basis
of the whole, the constituents tax (net)
& non-tax revenue individually
registered a fall of INR 50,225cr & INR
17,522cr.
2. May’20: The current standing revenue
for the month fell by 179% Y-o-Y basis
of the whole, the constituents tax (net)
& non-tax revenue individually
registered a fall of INR 31,265cr & INR
84cr.
3. June’20: The rebound stage of
revenue as it increases as compared
to the previous months but still a fall
of 34% Y-o-Y basis is witnessed for the
month. The respective fall for the tax
(net) & non-tax is of INR 35,099cr & INR
683cr.
These are the major sources from
which the government acquires its
necessary funds to spend on multiple
projects or on daily capital
requirement The chart below reflects
the yearly growth/fall in government
revenue as discussed above since
2016 to present a comparable volume.
SNo. Particulars April 2020 May 2020 June 2020 Total
1 Revenue Receipts 27,183 17,484 105,341 150,008
2 Tax Revenue (Net) 21,412 12,438 100,972 134,822
3 Non-Tax Revenue 5,771 5,046 4,369 15,186
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3. 3
Total Receipts
“Total Receipts” of government has two constituents as well, but they comprise
of first the above discussed topic “Revenue Receipts” & second “Non-Debt
Capital Receipts”, these are capital raised by divestments or sale of shares
held by government, the snapshot for the months is as follows:
1. April’20: The current standing total revenue for the month fell by 254%
Y-o-Y basis of the whole, the constituents revenue receipts & non-debt
capital receipts individually registered a fall of INR 67,747cr & INR
2,336cr. (Chart A)
2. May’20: The current standing total revenue for the month fell by 174%
Y-o-Y basis of the whole, the constituents revenue receipts & non-debt
capital receipts individually registered a fall & increase of INR 31,349cr &
INR 100cr. (Chart B)
3. June’20: The standing total revenue falls the lowest, as we witness a
trend of fally on Y-o-Y to decrease as compared to the previous two
months, but still a fall is registered of 32% amounting to INR 34,737cr.
Bifurcation of the total fall consists of fall in revenue receipts of INR
35,782 & non-debt capital an increase of INR 1,045cr. (Chart C)
Chart A Chart B
Chart C
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rahman.shuja@yahoo.in
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4. 4
Total Expenditure V/s Total Receipts
A snapshot of expenditure done in exchange of receipts earned for the
months of April-June’20. This would give a clear picture of the fiscal deficit
throughout the years, and growth/fall of the expenditure with the receipts for
the respective year keeping the year 2020 results in a focal point of
comparison.
April
A
P
R
I
L
SNo. Particulars 2015 2016 2017 2018 2019 2020
1 Revenue Receipts 25,313 22,075 35,081 70,657 94,930 27,183
2 Non-Debt Capital Receipts 1,781 2,584 1,448 793 2,701 365
3 Total Receipts (1+2) 27,094 24,659 36,529 71,450 97,631 27,548
Growth % -9.87% 32.49% 48.87% 26.82% -254.40%
4 Revenue Expenditure 128,408 141,150 213,464 176,714 224,091 278,754
6 Capital Expenditure 26,209 20,835 28,687 46,703 30,588 28,306
7 Total Expenditure (4+6) 154,617 161,985 242,151 223,417 254,679 307,060
Growth % 4.55% 33.11% -8.39% 12.28% 17.06%
8 Fiscal Deficit (7-3) 127,523 137,326 205,622 151,967 157,048 279,512
9 Revenue Deficit (4-1) 103,095 119,075 178,383 106,057 129,161 251,571
10 Primary Deficit (8-5) 110,529 121,470 186,200 136,349 137,491 252,816
The above graph reflects the variation over the years in form of receipts &
expenditure, it’s quite notable that in April’20 (Covid lockdown phase) the
expenditure has risen by 17% Y-o-Y basis, whereas the receipt on the other
hand have faced a steep fall by 254% Y-o-Y , this reflects the herculean burden
on government to fulfill a country’s demand of adequate money to burn to
keep the wheel running. The fiscal deficit for the said period is INR 2,79,512 cr,
which covers up 35% of the total budget fiscal deficit estimate for the year.
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rahman.shuja@yahoo.in
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5. 5
May
M
A
Y
SNo. Particulars 2015 2016 2017 2018 2019 2020
1 Revenue Receipts 27,048 43,616 47,931 55,800 48,833 17,484
2 Non-Debt Capital Receipts 65 785 1,205 211 366 466
3 Total Receipts (1+2) 27,113 44,401 49,136 56,011 49,199 17,950
Growth % 38.94% 9.64% 12.27% -13.85% -174.09%
4 Revenue Expenditure 96,680 123,665 193,026 232,449 241,193 177,881
6 Capital Expenditure 11,534 12,396 23,849 17,088 17,115 26,900
7 Total Expenditure (4+6) 108,214 136,061 216,875 249,537 258,308 204,781
Growth % 20.47% 37.26% 13.09% 3.40% -26.14%
8 Fiscal Deficit (7-3) 81,101 91,660 167,739 193,526 209,109 186,831
9 Revenue Deficit (4-1) 69,632 80,049 145,095 176,649 192,360 160,397
10 Primary Deficit (8-5) 49,648 52,802 118,147 135,538 153,862 135,262
In case of May’20 (Covid lockdown phase) the expenditure has fallen by 26%
Y-o-Y basis, whereas the receipt on the other hand has still faced a steep fall
by 174% Y-o-Y. Comparing the data of May’20 from April’20 itself, it’s clearly
visible that the expenditure of the government has subsequently fallen for the
month of May’20. The receipt on the other hand shows a lesser decreased
percent of 174% (May) as compared to 254% (April), but in figures the picture is
different as the income in April is INR 27,548 cr whereas in May it is INR 17,950
cr, there’s a subsequent fall in receipt as well on month basis . The fiscal deficit
for the said period is INR 1,86,831 cr, which covers up 23% of the total budget
fiscal deficit estimate for the year.
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rahman.shuja@yahoo.in
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6. 6
June
J
U
N
E
SNo. Particulars 2015 2016 2017 2018 2019 2020
1 Revenue Receipts 88,843 115,096 116,290 141,314 141,123 105,341
2 Non-Debt Capital Receipts 1,248 1,353 7,091 9,839 1,697 2,742
3 Total Receipts (1+2) 90,091 116,449 123,381 151,153 142,820 108,083
Growth % 22.63% 5.62% 18.37% -5.83% -32.14%
4 Revenue Expenditure 147,296 198,021 175,913 211,496 193,421 271,036
6 Capital Expenditure 20,866 15,765 15,792 23,197 15,297 33,067
7 Total Expenditure (4+6) 168,162 213,786 191,705 234,693 208,718 304,103
Growth % 21.34% -11.52% 18.32% -12.45% 31.37%
8 Fiscal Deficit (7-3) 78,071 97,337 68,324 83,540 65,898 196,020
9 Revenue Deficit (4-1) 58,453 82,925 59,623 70,182 52,298 165,695
10 Primary Deficit (8-5) 31,025 43,249 3,928 12,231 -1,053 113,792
June turned out to be the rebound month of the receipts in form of taxes and
other sources of income of the union accounts, as the receipt income reflects
registered a fall of 35% Y-o-Y basis only. Compared to 254% & 174%, it is
actually a recovery parallel running along the upliftment of covid lockdown, as
the upliftment caused the economy to run back its normal course of activities
and get itself to be comfortable with the virus and working along with it. The
risk attached to this receipt gain is extremely high as India is the third highly
COVID infected country as per the current count.
The cumulative cover-up of fiscal deficit compared to the budget estimates of
2020-21 as covered in the first section stands with these three months actual
data stands at 83%.
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rahman.shuja@yahoo.in
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7. 7
What if?
The big question what if we never had a COVID situation, this is an estimate of
how the accounts should have been as compared to the actual results till
June’20:
2
0
2
0
SNo. Particulars
What should have
happened if no
COVID situation
existed*
Actuals for
Q1 2020
1 Revenue Receipts 505,232 150,008
2 Non-Debt Capital Receipts 56,242 3,573
3 Total Receipts (1+2) 561,473 153,581
4 Revenue Expenditure 657,555 727,671
5 Capital Expenditure 103,002 88,273
6 Total Expenditure (4+5) 760,558 815,944
7 Fiscal Deficit (6-3) 199,084 662,363
8 Revenue Deficit (4-1) 152,324 577,663
9 Primary Deficit (7-5) 22,034 501,870
The imagination runs wild to a picture where the budgeted fiscal deficit would
have been only INR 199,084cr for the Q1 FY 2020-21, but the reality is different,
with the surpassing mark of 17 lakhs COVID infected. The dynamics of
accounts and growth prospects has completely changed axis causing a call
for revision of the annual estimate in the possible next upcoming months!
(*This is a hypothetical situation basis calculation based on the union yearly
budget simply divided by four to get an estimated figure of a quarter.)
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rahman.shuja@yahoo.in
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8. 8
Conclusion
I. Fiscal Deficit Situation
As per the current speed of exhausting up the limit of fiscal deficit (83%) it’s
clear that it’s an alarming situation, if this speed continues then new provisions
would be required to re-write the budget estimates to cover-up the yearly fiscal
deficit.
II. Indirect Tax Influence Exposed
This whole COVID situation has exposed the effect & value of indirect tax in
Indian economy. The whole situation occurred in the start of the financial year
2020-21, as the tax collections for the examined period fell at multiple levels
reflecting the control of government on the entities, as well as the sectors India
is majorly dealing in and how much they would contribute in case of physical
movement boundations. As this period is not relatively relevant to collection of
Direct Tax, hence only indirect tax has been considered.
III. What’s next: “Unlock India” with a rebound on
receipts?
Well, keeping the “Unlock of the economy” in consideration, it would not be
wrong to claim change in the receipt level, but subsequently receipts will
attract expenditure as well because of the demand of the resources by the
masses. Hence, we may see a spike in receipt but it would be higher in the
expenditure section on comparison.
Data Source:
http://cga.nic.in
For more detailed tables visit this article
google sheet: shorturl.at/twyIS
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8