Helped by the buoyant tax revenues, the centre’s finance continued to look healthy with the fiscal deficit at Rs 4.68 lakh crore or 31.1% of the budget estimate at the end of first five months of the current financial year, official data showed Thursday.

The government’s financial position has vastly improved from the pandemic hit FY21 when the fiscal deficit was Rs 8.7 lakh crore, or 109.3% of the budget estimate, in April-August.

The net tax revenue for the first five months was Rs 6.45 lakh crore compared with Rs 2.84 lakh crore for the same period last year.

Experts, however, remain divided on whether the government will meet its fiscal deficit target of Rs 15.1 lakh crore or 6.8% of GDP for FY22.

CARE Rating has projected fiscal deficit slip to 7.65%-7.72% of GDP, up to 1.0 percentage point higher than budgeted.

, on the other hand, sees it lower than the budget estimate.

“Assuming that there is no change in the nominal GDP, the increase in the quantum of fiscal deficit would potentially push up the fiscal deficit to 7.65% to 7.72% of GDP in FY22 resulting in 0.9 to 1.0 percentage point slippage over the budgeted estimate of 6.76%,” said Madan Sabnavis, chief economist,

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Aditi Nayar, Chief economist at ICRA Ratings said the government’s fiscal deficit in FY2022 is likely to be lower than budgeted, but its extent would be driven by the size of the disinvestment inflows eventually realised.

The centre’s total expenditure stood at Rs 12.76 lakh crore or 36.7% of the budget estimate for FY22.

Capital expenditure in the period was Rs 1.72 lakh crore or 31% of budget estimates, while revenue expenditure stood at Rs 11.04 lakh crore or 37.7% of BE.

Both capital and revenue spending picked up in August, indicating that the government spending push had begun to show some results. The April-August capital spending is 27.8% higher from a year ago.

With all ministries now permitted to spend as per their own approved budget, we anticipate that spending will gather pace in the second half of this year, Nayar said.

“Revenue expenditure recorded a mild 2% growth in July-August 2021, which suggests that government final consumption expenditure may weigh upon the GDP growth in Q2 FY2022, while the robust 31% expansion in capital expenditure in this two month period will support the growth in gross fixed capital formation,” Nayar added.

The government’s total receipts clocked Rs 8.08 lakh crore at the end of August or 40.9% of budget estimates compared with pandemic hit Rs 3.77 lakh crore or 18.3% of budget estimate for the same period last year.

Tax revenues stood at Rs 7.94 lakh crore or 44.4% of the BE.

ICRA expects tax revenues to overshoot the budgeted Rs 17.88 lakh crore.