Economic Survey 2022-23 has expressed confidence that the county is on course to achieve the fiscal deficit target of 6.4% estimated in the current financial year despite additional spending on subsidies necessitated by the conflict in Europe. The Economic Survey was tabled by Finance Minister Nirmala Sitharaman in the parliament today.
Pointing out that India entered into the pandemic with a stretched fiscal position, the Economic Survey says the government's prudent and calibrated fiscal response enabled stable public finances even amidst the present uncertainties. "The fiscal deficit of the Union Government, which reached 9.2 per cent of GDP during the pandemic year FY21, has moderated to 6.7 per cent of GDP in FY22 PA and is further budgeted to reach 6.4 per cent of GDP in. This gradual decline in the Union government's fiscal deficit as a per cent of GDP, in line with the fiscal glide path envisioned by the government, is a result of careful fiscal management supported by buoyant revenue collection over the last two years," the Survey says.
The Union Budget for FY23 was presented in a recovering yet uncertain macroeconomic environment, not anticipating the geopolitical developments that unfolded during the year, it said. "As the conflict in Europe broke out early in the year, it aggravated supply disruptions and had an adverse impact on the prices of fuel, food, and other essential commodities. The government's fiscal policy response necessitated additional spending on food and fertiliser subsidies, accompanied by specific duty cuts to control the pass-through of the high imported prices to the consumers/users," it adds.
"Despite additional fiscal resource pressures during the year, the union government is well on track to achieve the budget estimate for the fiscal deficit in FY23. The fiscal deficit of the union government at the end of November 2022 stood at 58.9 per cent of the budget estimate, lower than the five-year moving average of 104.6 per cent of BE during the same period," it says.
The survey attributed the resilience in the fiscal performance to the revenue buoyancy witnessed in the year along with recovery in economic activity, and conservative assumptions of macroeconomic variables in the Budget. "The prudent assumptions in Budget FY23 provided a buffer to the government during global uncertainties. The Gross Tax Revenue (GTR) to the Centre was envisaged to grow at 9.6 per cent in FY23 budget estimate relative to FY22 revised estimate. However, given the higher 'provisional actual' figures recorded for the GTR relative to the revised estimates in FY22, the growth in GTR of FY23 BE turns out to be a mere 1.8 per cent over FY22 PA. Against this implicit (budgeted) growth, the data of the first eight months of the year show that GTR has grown at a much higher rate. The annual estimate of GTR for FY23 is thus expected to overshoot the budget estimates," the survey points out.