Revenue expenditure turned out to be higher than budgeted by 0.1 per cent of GDP (Rs 38,103 crore) in 2023-24 (RE), reflecting additional spending measures. Capital expenditure, on the other hand, fell short of the budget estimates (BE) by Rs 50,715 crore due to lower than budgeted loans and advances (Rs 20,640 crore) and capital outlay53 (Rs 30,075 crore). Nevertheless, capex grew at a robust pace of 28.4 per cent in 2023-24 (RE) and rose to 3.2 per cent of GDP from 2.7 per cent in 2022-23.

On the receipts side, gross tax revenues surpassed BE by Rs 76,353 crore, driven up by higher income tax revenues which offset shortfalls in excise and customs collections. Income tax recorded a buoyancy of 2.5 in 2023-24 (RE) vis-à-vis 1.0 in BE. Net tax revenue, however, fell short of the BE by 0.02 per cent of GDP (Rs 6,713 crore) due to higher devolution to states. Non-tax revenue collections exceeded BE by 0.3 per cent of GDP (Rs 74,145 crore) on the back of higher dividend transfers by the Reserve Bank and public sector enterprises. Disinvestment receipts at Rs 30,000 crore in 2023-24 (RE) were, however, below the BE.

State Finances in 2023-24

States budgeted a combined GFD of 3.1 per cent of GDP in 2023-24 within the Centre’s limit of 3.5 per cent for the year. According to the data for 22 states available from Comptroller and Auditor General (CAG) of India for 2023-24, states’ GFD at 92.0 per cent of the budget estimates was higher than the previous year (88.1 per cent). On the receipts front, states’ overall tax revenue increased by 14.7 per cent due to higher devolution, while own tax revenue growth decelerated. Within states’ own tax revenue, growth in sales tax/value added tax and state excise moderated, while growth in state goods and services tax increased marginally. Non-tax revenues expanded by 16.8 per cent, while grants from the Centre contracted by 21.7 per cent following the cessation of GST compensation to states and the tapering off of finance commission grants.

Gross GST Revenue Collection Spurts 10% On Year In May

The gross Goods and Services Tax (GST) revenue for the month of May 2024 stood at Rs 1.73 lakh crore. This represents a 10% year-on-year growth, driven by a strong increase in domestic transactions (up 15.3%) and slowing of imports (down 4.3%). After accounting for refunds, the net GST revenue for May 2024 stands at Rs 1.44 lakh crore, reflecting a growth of 6.9% compared to the same period last year.

The gross GST collections in the FY 2024-25 till May 2024 stood at Rs 3.83 lakh crore. This represents an impressive 11.3% year-on-year growth, driven by a strong increase in domestic transactions (up 14.2%) and marginal increase in imports (up 1.4%). After accounting for refunds, the net GST revenue in the FY 2024-25 till May 2024 stands at Rs 3.36 lakh crore, reflecting a growth of 11.6% compared to the same period last year.

In the month of May, 2024, the Central Government settled Rs 38,519 crore to CGST and Rs 32,733 crore to SGST from the net IGST collected of Rs 67,204 crore. This translates to total revenue of Rs 70,928 crore for CGST and Rs 72,999 crore for SGST in May, 2024, after regular settlement.

Similarly, in the FY 2024-25 till May 2024 the Central Government settled Rs 88,827 crore to CGST and Rs 74,333 crore to SGST from the net IGST collected of Rs 154,671 crore. This translates to a total revenue of Rs 1,65,081 crore for CGST and Rs 1,68,137 crore for SGST in FY 2024-25 till May 2024 after regular settlement.

Outlook:

The interim Union Budget 2024-25 highlighted that the GFD has been budgeted at 5.1 per cent of GDP for 2024-25, a consolidation of 76 basis points (bps) over the RE for 2023-24, led by the containment of revenue expenditure at 11.2 per cent of GDP, even as capital expenditure is budgeted to rise to 3.4 per cent of GDP from 3.2 per cent in 2023-24 (RE). On the expenditure front, payouts on major subsidies are expected to contract by 7.8 per cent in 2024-25 (BE), restricting revenue spending growth to 3.2 per cent. Meanwhile, the Reserve Bank of India approved a dividend of Rs 2.11 lakh crore for the Central government for FY24, marking a significant increase of around 141% compared to FY23. In FY23, the central bank had transferred Rs 87,416 crore to the Centre as surplus. This can also held to fine tune the government fiscal position in coming months.