Government capital expenditure exceeds 5 trillion; fiscal deficit remains steady

The Indian government has achieved capital expenditure (capex) exceeding the Rs 5 lakh crore milestone, which accounts for more than 50% of the budgeted target for the ongoing fiscal year 2023-24, according to a senior official. This development has bolstered confidence that both revenue and spending patterns are aligning with expectations. The official emphasized that the fiscal deficit goal of 5.9% of the gross domestic product for the current fiscal year is on track to be met.

The government’s fiscal consolidation strategy includes a glide path aimed at reducing the fiscal deficit to 4.5% of GDP by the year 2025-26. Pre-budget discussions with various ministries are currently in progress, with the anticipation of additional demand from significant government programs such as the Mahatma Gandhi National Rural Employment Guarantee Scheme, fuel subsidies, and fertilizer subsidies due to global geopolitical tensions. The official also indicated that any additional requirements for the Mahatma Gandhi National Rural Employment Guarantee Scheme will be evaluated within prudent limits. Furthermore, the recent uptick in government bond yields, influenced by rising US Treasury yields and geopolitical tensions, is not currently a significant concern, although the government is monitoring the situation and will take appropriate measures if yields surpass acceptable levels.

Additionally, the official reported a substantial increase in collections under small savings schemes during the April-September period. Deposits for the Senior Citizens Savings Scheme surged more than 2.5 times year-on-year, reaching a record high of Rs 74,675 crore ($10.1 billion). This reflects a remarkable 160% growth compared to the corresponding period in the previous year. Notably, the newly introduced Mahila Samman Savings Certificate, unveiled in this year’s budget, gathered collections amounting to Rs 13,512 crore during the same period. The interest rate for the Senior Citizens Savings Scheme was raised to 8.2% from 8% during the April-June period and has remained unchanged since then.