Sharp spike in Centre's fiscal deficit in Feb at 82.7% of FY22 target

The Centre's fiscal deficit jumped to 82.7% of the FY22 target in April-February period of the fiscal, compared with 76% in the corresponding period of the previous financial year. This is a sharp spike from the April–January period of the current fiscal when the fiscal deficit was 58.9% of the target.

According to data from the Controller General of Accounts (CGA), the fiscal deficit in the April–February period stands at ₹13,16,595 crore. In the month of February, fiscal deficit stood at ₹3,78,727 crore – almost double sequentially from ₹178,502 crore in January. Similarly, it is more than double also from ₹1,71,543 crore in the months of February, 2021.

The spike in the deficit number is majorly due to the transfers made to the states in the month of February, which has impacted the net revenue collection of the central government. A total of ₹2.42 lakh crore was transferred by the central government to the states in February. The state transfers were up 154% sequentially from ₹95,082 crore in January this year. Interestingly the state transfers stood at ₹35,200 crore in February last year.

This led to a negative net tax revenue to the tune of ₹66,550, which propelled the fiscal deficit.

On the expenditure front, the total expenditure in the April-February is at 83.4% of the target compared with 81.7% in the corresponding period of the previous financial year. At 80.6% though, the capital expenditure seems to have slowed down during the period compared with 92.4% in April–February FY21.