Fiscal deficit—the gap between spending and receipts, met through borrowings—stood at 33.9% of the full- year target in July, aided by strong tax and non-tax revenue receipts.

Fiscal deficit in the first four months of FY23 was at 20.5% of the full-year target. Higher revenue spending and front- loading of capital expenditure led to fiscal deficit in April-July this year reaching a third of the full year target.

Overall revenue receipts in the first four months of this fiscal stood at ₹7.6 trillion or 29% of the full year target. Revenue deficit, or the gap between revenue receipts and revenue spending, stood at ₹3 trillion up to the end of July, accounting for 35% of the full-year target.

Meanwhile, the index of eight core industries rose 8% in July 2023 as compared with the same period last year, according to provisional figures released by the ministry of commerce and industry. All core industries witnessed on-year growth in the month ended 31 July, with crude showing a positive growth after 13 months and electricity and coal production rising despite unseasonal rains.

The combined index of eight core industries— comprising crude oil, steel, coal, cement, refinery products, natural gas, fertilisers and electricity—had increased by 8.2% annually in May 2023.

“Encouragingly, the support to the core sector data in July 2023 was broad-based as all of the sub-sectors witnessed a positive growth for the first time since May 2022. Even when compared with the pre-covid level (February 2020), the core sector output was 13.8% higher and it has been higher than the pre-covid period on a sustained basis since November 2021,” said Sunil Kumar Sinha, senior director and principal economist at India Ratings and Research. He estimated the core sector to grow over 7% in August 2023.

The Centre collected ₹5.8 trillion in tax revenue up to July, accounting for a quarter of the ₹23.3 trillion full-year target. While corporate tax collection of ₹1.76 trillion up to July end was a tad lower than the amount collected a year ago, personal income tax collection of ₹2.57 trillion and central goods and services tax (CGST) collection of ₹2.73 trillion exceeded the amounts collected in the same period a year ago. Union excise duty collection in the first four months of this fiscal year stood at ₹76,200 crore, below the ₹85,147 crore collected in the same time a year ago.

Among non-tax revenue receipts, a major highlight is the improvement in profits and dividends received by the central government. Up to end of July, receipts by way of dividends and profits exceeded ₹1 trillion, more than the full-year budgeted target of ₹91,000 crore. The Centre had collected ₹ 5,465 crore from disinvestment till July-end against a full-year target of ₹ 51,000 crore.

The Centre also transferred ₹3 trillion to state governments up to the end of July as devolution of taxes, which was ₹1 trillion more than what it transferred a year ago.

In the core index, crude oil increased by 2.1% in July 2023 over the same period last year, showing a positive growth after 13 months and substantially higher than a de-growth of 3.8% in July of last year. Electricity production grew 6.9%, higher than the 2.3% a year ago. “The above-average growth in cement and electricity sectors despite the seasonal rains in July 2023 indicates steady progression of economic activity in the country,” Sinha said.

“The delayed monsoon in June did keep construction work on, which generated some demand for cement. Normally cement demand ebbs during monsoon,” said Madan Sabnavis, chief economist at Bank of Baroda.

Although revenue receipts in the April-July period was more than what was received in the same period a year ago in absolute terms, as a share of this year’s full year target, it was at 29%, compared to last year’s 34%.

Coal production reported a 14.9% annual growth – which was a 13-month high – while refinery products grew at a lower rate of 3.6% over 6.2% last year.

“The growth in the sectors was linked with steady flow of freight and as work from home was no longer was the norm, there was more movement of people and hence demand for fuel,” Sabnavis added. Natural gas production reported a 3.6% annual growth in June.

However, fertilizer production reported a milder growth at 3.3% during July compared to 6.2% during the same period of the previous year. The slowed growth will pick up before rabi sowing begins.

The eight industries account for 40% of the IIP, and basis the July data, IIP growth rate would be in the range of 5-6% for July, Sabnavis added.

Updated: 31 Aug 2023, 11:02 PM IST