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India’s 2022-23 budget deficit could reach 6.5 percent, says SBI Research

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India had a trade deficit of $100 billion in the April-July period.

New Delhi:

India’s budget deficit, the difference between revenue and expenditure, is expected to be about 6.5 percent of gross domestic product, against the budget estimate of 6.4 percent, SBI Research said in its weekly report.

The budget deficit for the first quarter of FY23 (April-June) has reached 21.2 percent of the annual target, compared to 18.2 percent in the same period last fiscal year.

“Tax revenues were robust with record high GST revenues made possible by increased compliance and increased economic activity. On the expenditure side, the government has increased capital expenditures, which bodes well for our growth potential,” the report said.

GST collections have increased significantly this year, with the monthly collection remaining above Rs 1.4 lakh crore for five consecutive months, the report said, adding that the collections have been robust purely due to the impact of consumption.

India’s capital expenditure was 23.4 percent of the budget estimate in the first quarter, compared to 20.1 percent in the same period last year.

It noted that the government has announced several measures this fiscal year to halt rising inflation, including cuts in excise taxes on oil, additional subsidies for fertilizer and gas, leading to higher spending.

“However, the unexpected income tax and additional tax revenues resulting from GST on top of the budget are expected to provide relief from the fiscal situation,” it added.

However, India’s trade deficit continues to widen, reaching a record high of USD 31 billion in July, mainly due to exports falling to USD 35 billion from more than USD 40 billion in the previous month, while imports remained strong on 66 billion dollars.

India had a cumulative trade deficit of $100 billion in the April-July period.

“If we calculate this annualized trade deficit figure, it comes out at 8.5 percent of our FY23 GDP projections. Interestingly, this is much lower than the peak deficit of 10.7 percent of GDP reached in FY13. So the current situation is much better than that in 2012-13.”

As for the current account deficit, it revised estimates from 3.2 percent of GDP to 3.7 percent for 2022-23. CAD is the difference between a country’s export value compared to its import.

(This story was not edited by UK Time News staff and was generated automatically Platforms.)

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