The central government contained its fiscal deficit in the first 10 months of the 2023-24 financial year (FY24) – at 63.6% of the revised annual target – compared with 67.8% a year ago, putting a lid on revenue spending amid improved revenue mop up, official data released on Thursday showed.

This further bolsters the official assertion that the Centre would meet its revised FY24 fiscal deficit goal of 5.8% of gross domestic product (GDP), a tad better than the budgeted 5.9%, despite a moderation in nominal GDP growth from the initial target.

In absolute terms, the fiscal gap until January for FY24 dropped 7.3% from a year ago period to ₹11.03 lakh crore, on the back of a sharp decline in five of the past six months. The deficit in December alone fell over 39% on-year to ₹ 1.20 lakh crore.

Fiscal Gap Till Jan Shrinks

Revenue spending moderated for a fifth month in a row through January from a year earlier after a spike in the initial months of FY24. At ₹26.34 lakh crore, it stood at 74.4% of the FY24 target in the first 10 months, against 75.1% a year ago. Capital spending jumped at a much faster rate until January, but at 26.6%, the growth remained lower than the revised annual target of 28.4%.

Given that such spending usually slows down around the general elections, some experts expect the capex to fall short of the FY24 revised estimate of ₹9.50 lakh crore and help the government meet its fiscal deficit target. At ₹7.21 lakh crore until January, capex touched 75.9% of the annual target, compared with 78.3% in the year ago period.

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