RBI expresses doubts over govt meeting fiscal deficit target

The Reserve Bank of India (RBI) on Wednesday expressed  concern about the government's capability to contain fiscal deficit at the budgeted 6.8 percent this financial year after it moved the second supplementary demand of grants valued Rs 3.73 lakh Cr which came despite  an enormous 83 percent jump in net tax revenue thus far this year to Rs 10.53 lakh Cr. 

The government has budgeted for total expenditure of Rs 34.83 lakh Cr or 6.8 percent of GDP. While the net tax revenue rose from Rs 5,75,697 Cr in October 2020 to Rs 10,53,135 Cr till October 2021, a growth of 82.93 percent annualized, total expenditure rose only by 9.95 percent, led by infra spending to Rs 18,26,725 Cr from Rs 16,61,454 Cr during the same period, the Central Bank said in the financial stability report.

 While overall tax revenue front was boosted by a 55.79 percent jump in gross tax collection to Rs 13,64,101 Cr till October, up from Rs 8,75,591 Cr in October 2020. Of the total, direct tax revenue soared 70.73 percent to Rs 6,59,066 Cr from Rs 3,86,025 Cr and indirect tax revenue rose 45.01 percent from Rs 4,45,673 Cr to Rs 6,46,283 Cr. Till October, all the deficit indicators of the centre showed improvement on-year as well as from their pre-pandemic levels. Gross tax revenues have been buoyant, with robust growth under all major heads, with direct taxes in the lead.

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