Govt to keep a lid on spends to avoid fiscal slippage
Revenue Expenditure may be Cut
“There is little room for additional provisioning,” the official said. “There could be cuts in revenue expenditure.” There will not be any reduction in capital expenditure budgeted at ₹7.5 lakh crore in the current fiscal. ET had earlier reported that the government may not present a supplementary demand for grants in the monsoon session that’s just started.
The fiscal deficit for FY23 is seen at ₹16.6 lakh crore, or 6.4% of GDP. The government faces a spike in food and fertiliser subsidies and had to reinstate support for cooking gas to shield consumers.
On the revenue side, it took a hit due to the cut in excise on petrol and diesel to reduce soaring fuel retail prices. The higher expenditure and lower revenue had raised concerns that the fiscal slippage could stoke inflation, undermining efforts by the RBI. Consumer inflation has eased from the eight-year peak of 7.8% in April to 7% in June but has stayed outside RBI’s 2-6% target range for six consecutive months.
The central bank raised its key policy rate in quick succession in May and June by a cumulative 0.9 percentage point and is widely expected to impose another steep increase at the upcoming August 2-4 monetary policy review.
Fiscal concerns have eased slightly after the government imposed a ‘windfall’ tax on domestic crude and an export levy on fuel exports, which is expected to yield about ₹1 lakh crore.