The government has ramped up capital spending by nearly 60% in the first two months of the current financial year, in a bid to perk up investment sentiment and crowd in private investment. Early passage of the budget in March has allowed the government start spending from the beginning of the new financial year in April.
In April-May, the government spent Rs 52,536 crore, 58% more than the yearearlier period. The fast start to spending has taken the fiscal deficit to 68.3% of the budget estimates against 42.9% last year.
The revenue performance in the first two months has also been better than last year, with total receipts adding up to 5.4% of the budget estimates against 4.8% last year. Total spending in the first two months was 21.4% of the full year budget, compared with 15.1% a year earlier.
The heavy spending has spiked the revenue deficit to 100% of the full year estimate in the first two months itself, compared with 56.2% last year. It, however, has offered support to an economy still adjusting to demonetisation disruption, providing investment demand at a time when private activity has been muted.
Total capital spending was 17% of the budget estimates against 13.5% in the first two months of last year. Net tax revenue was pegged at 5.5% of full year estimate, compared with 4.7% last year.