New Delhi: The central government’s accounts for the first four months of the financial year reveal key economic trends in areas such as the corporate sector's assumptions about profitability, individuals' incomes, consumption of goods and services, a spike in global fertilizer prices and imports. The numbers also point to how the government is managing its fiscal health and the economy at a time when macroeconomic stability has become a priority for policymakers due to a mix of external and internal factors. Data from the Controller General of Accounts for July point to front-loading of expenditure so that the effect of the planned spending kicks in early in the year. Mint takes a close look
New Delhi: The central government's accounts for the first four months of the financial year reveal key economic trends in areas such as the corporate sector's assumptions about profitability, individuals' incomes, consumption of goods and services, a spike in global fertilizer prices and imports. The numbers also point to how the government is managing its fiscal health and the economy at a time when macroeconomic stability has become a priority for policymakers due to a mix of external and internal factors. Data from the Controller General of Accounts for July point to front-loading of expenditure so that the effect of the planned spending kicks in early in the year. Mint takes a close look
What does the data say about incomes?
Incomes of corporations and individuals show divergent trends. Data from the Controller General of Accounts (CGA) show that Centre's revenue from corporate tax collection remains a tad weak so far this fiscal compared to what was collected in the same time a year ago. At the end of July, corporate tax collection of ₹1.76 trillion lagged behind what was collected in the same time a year ago by over 10%. However, personal income tax receipts in the first four months of this fiscal at ₹2.57 trillion shows a 6% growth over what was collected in the same time a year ago. Corporations pay taxes in four installments in a year as advance tax based on their estimates of profits in the year. Gross tax revenue in the first four months of the fiscal at ₹8.9 trillion, which also includes indirect taxes, shows a 3% annual growth.
What does tax data say about consumption?
Centre's receipts from goods and service tax (GST), a tax on consumption, shows a positive trend with double digit growth. At ₹2.73 trillion, cumulative CGST receipt upto July shows a robust 16% year-on-year growth, highlighting a strong consumption trend. To be sure, inflation also plays a role in GST collections. GST compensation cess collection at the end of July shows a 10% annual growth. This is levied on items in the 28% GST slab, especially, automobiles. GST collection could see further improvement in the coming months on account of festive demand for goods and services but inflation and high interest rates pose risks to consumption growth. Basic customs duty receipts in the meantime, showed a 27% jump at the end of July.
What is the trend in the collection of taxes on petrol and diesel?
The Centre's excise duty collections show a trend of moderation. In the first four months of this financial year, the Centre collected ₹76,200 crores from central excise duty, which is levied on crude oil, petrol and diesel. This shows a contraction of more than 10% from the excise duty receipts in the year ago period. This is in spite of the windfall tax on production of crude oil and export of petrol, diesel and jet fuel. The windfall tax levied in the form of special additional excise duty on crude oil, petrol and diesel is reviewed frequently on the basis of international prices of these commodities.
What about dividend income?
The Centre's profits and dividend income showed impressive growth in the first four months of this fiscal. Centre collected more than ₹1 trillion by the end of July, exceeding its budget target of ₹91,000 crores. Public sector companies and the RBI give dividend to the Centre. Another key trend is the higher capital expenditure the Centre has made in the April-July period compared to the same time a year ago.
What is the trend in the Centre's fiscal deficit?
Central government's fiscal deficit or the gap between spending and receipts met through borrowings crossed ₹6 trillion or a third of the ₹17.9 trillion estimated in the union budget for FY24, at the end of July. Fiscal deficit stood at 33.9% of the full year target at the end of July, showing that some of the planned spending including capital expenditure is being front-loaded.