May’s lower spending pegs fiscal deficit at 8.2%

Increase in revenue receipts in first two months also helps

India’s fiscal deficit in the first two months of 2021-22 stood at 8.2% of the Budget target with revenue receipts rising even as spending contracted by the end of May, data released by the Controller General of Accounts on Wednesday show. Economists said capital spending contracted by 41% in May after a sharp uptick in April, indicating that State-level restrictions during the second wave of the pandemic had hurt economic activity. They, however, cautioned against interpreting the outcomes over April and May. “Benefitting from a jump in tax and non-tax receipts amidst a contraction in revenue expenditure, the Government of India’s fiscal deficit was limited to ₹1.2 lakh crore in April-May 2021, less than 30% of last-year’s level of ₹4.7 lakh crore during the nationwide lockdown,” Aditi Nayar, chief economist at ICRA, wrote in a note.