India's fiscal deficit soars to 70% of FY12 estimate

India's budget deficit for the first six months of the current fiscal has crossed 70% of the full year target, adding to fears that the Government won't be able to contain it within the projected levels. Fiscal deficit for the April-September 2011 period was almost double of the year-ago period, according to the data released by the Controller General of Accounts (CGA). The budget shortfall for the first six months of FY12 stood at Rs. 2.92 lakh crore versus Rs. 1.33 lakh crore in the same period of the last financial year. However, the pace of increase in the fiscal deficit slowed in September compared to August. The fiscal deficit surged from 39.4% of FY12 target in June, to 55.4% in July, and further to 66.3% in August. The Government has set a target of 4.6% of GDP, but most economists see it above 5.5% of GDP. Plan expenditure was only 40.3% of the budget estimates at the end of the first six months, as against 45.5% in the year-ago period. Gross tax revenues for April-September 2011 were up 10.2% from the same period last year. On a net basis, after setting aside the share of states, it is up only 4.1% because of heavy refunds. Non-tax revenue for the first half of FY12 is just a third of what was achieved last year. Non-tax revenue collection stood at Rs. 507.97bn this year versus Rs. 1.69 lakh crore in the year-ago period when the Centre benefited from the bumper sale of spectrum for 3G services and wireless broadband. At Rs. 2.43 lakh crore, total tax revenue collection in the April to September period of 2011 was slightly higher than last year compared to Rs. 2.33 lakh crore in the first half of last year. However, in terms of budget targets for FY12, it was just 36.6% as against 43.7% in the first six months of FY11. Plan and non-plan expenditure were higher than last year in absolute terms.