Centre’s capex at Rs 1.16 lakh crore in September, highest so far in FY24

Even as the Centre’s fiscal deficit rose to 39.3% of its full-year target in the first six months of 2023-24, tax revenues continued to grow at a healthy pace, indicating that it may be able to meet its Budget targets while maintaining its focus on capital expenditure.

According to data released by the Comptroller General of Accounts on Tuesday, the Centre’s capital expenditure between April and September 2023 amounted to 49% of its budgeted target of Rs 10 lakh crore for the fiscal. In fact, in September, the Centre’s capex was Rs 1.16 lakh crore, which was the highest monthly expenditure this fiscal. Prior to this, its capex had touched a high of Rs 1.10 lakh crore in June this year.

“The noteworthy aspect of the Centre’s expenditure policy has been the progressive improvement in the quality of expenditure as reflected in the ratio of capital expenditure to revenue expenditure. The ratio increased to 0.30 in H1 FY24, higher than 0.23 a year ago,” said Rajani Sinha, Chief Economist, CareEdge.

Meanwhile, tax revenues have also registered robust growth with net tax revenues totalling Rs 11.6 lakh crore in the first six months of the fiscal, which is roughly half or 49.8% of the full fiscal target of Rs 23.3 lakh crore.

While net income tax revenue stood at Rs 4.5 lakh crore between April and September this fiscal, net corporate tax collections also totalled a similar Rs 4.5 lakh crore in the period.

“The Government of India’s gross tax collections expanded by a healthy 16% year on year in the first half of fiscal 2023-24, boosted by the year-on-year uptick in flows in August-September 2023, led by direct taxes,” said Aditi Nayar, Chief Economist, Head - Research & Outreach, ICRA.

With a 27% rise in corporation tax collections in September 2023 amidst healthy advance tax inflows, nearly 49% of the FY2024 Budget Estimate had been collected, which is an encouraging trend, she further said. Moreover, half the personal income tax target of FY2024 BE had been achieved in the first half of the fiscal.

Gross direct tax collection recovered in August and September after lagging in the first four months of FY24, noted Sinha, adding that CareEdge remains optimistic about meeting the targeted revenue receipts supported by buoyancy in tax as well as non-tax collections.

Collections of goods and services tax have also been rising at a healthy pace this fiscal at about Rs 1.6 lakh crore per month. While some of this is due to higher inflation, improved economic activity and a focus on compliance has also boosted collections.  Official data on collections from GST for the month of October is expected to be released on November 1.

As per the CGA data, Central GST collections amounted to Rs 3.98 lakh crore between April and September 2023. The month of September registered lower collections at Rs 61,731 crore as against collections of Rs 62,720 crore each in August and Rs 67,234 crore in July.

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