Revenue Collection Up – and so is deficit.

By Vijay Kumar

The Q1 results of India Incorp are out and while the FM can smugly feel satisfied at the better revenue collection, he should be very worried about the deficit situation. As usual the Government is spending more than it makes and much faster and is on a borrowing spree.

Look at these alarming red signals. While the Revenue collections have shown a 30% increase, the total receipts are short by nearly 20% compared to the previous year, while expenditure has gone up by 4%. Sad part of the expenditure is we are spending all the money on consumption. There is hardly any investment. The capital expenditure up to June last year was 5674 Crores, a very small expenditure indeed, but this year even this token amount is not invested in capital spending. The Capital expenditure has come down by 50% to 2863 Crores. The fiscal deficit is a huge 54517 Crores, an increase of 31% over last year. Simply put it means that for every Rupee that the Government gets, it spend Rs.2.40. In the case of a Government servant, habitual indebtedness is an offence; that of course does not apply to the government.

And how does the Government spend more than it earns? Simple, by borrowing. The Finance Minister told Parliament that he proposed to borrow One Lakh Ten Thousand Crores in the year. He has already borrowed fifty five thousand crores in the first three months; that is 50% of the budgeted estimate is already borrowed.

The situation is not really alarming; it was always like this- we are used to this. Only if we could spend a little more money on capital account and a little less on revenue account!
(Source- Controller General of Accounts)