Global fiscal deficit

It is estimated that despite Covid-19 and populist schemes the outlook on the finances of Indian states is set to improve in FY23. Notably, greater financial assistance provided by the Centre is expected to tide over any revenue shortfall during the ongoing pandemic phase. In FY23 budget, the Centre has allocated Rs 1 trillion worth of financial assistance by way of the 50-year interest-free loans.

Accordingly, the net profit rose to Rs 2,197 crore from Rs 1,061 crore during the corresponding period of the previous fiscal. The lending major's net interest income grew by 14.38 per cent to Rs 8,552 crore during the quarter ended December 31, 2021, compared to Rs 7,477 crore in the corresponding period of the previous fiscal. The consolidated net profit stood at Rs 2,464 crore in Q3FY22 as against Rs 1,196 crore in Q3FY21.

According to the fiscal data reported by the Comptroller and Auditor General (CAG) for 19 state governments for Q1 FY22, the states' combined revenue receipts in that quarter were only 2 per cent higher than the pre-Covid level of Rs 4.3 lakh crore. Simultaneously, the revenue spending of the 19 state governments increased by 14 per cent to Rs 4.9 lakh crore in Q1 FY22.

The fiscal deficit -- the difference between revenue and expenditure -- for the April-June 2021-22 period stood at Rs 321,143 crore, or 21.3 per cent of the budget estimates (BE). The FY22 deficit has been pegged at Rs 15.06 lakh crore. Besides, the CGA data showed that the fiscal deficit during the corresponding months of the previous fiscal was 103.1 per cent of that year's target.

The fiscal deficit -- the difference between revenue and expenditure -- for April-June 2021-22 period stood at Rs 274,245 crore, or 18.2 per cent of the budget estimates (BE). The FY22 deficit has been pegged at Rs 15.06 lakh crore. Besides, the CGA data showed that the fiscal deficit during the corresponding months of the previous fiscal was 83.2 per cent of that year's target.

Federal revenue for the nine-month period ending in June rose to 3.05 trillion dollars, while total outlays rose to 5.29 trillion dollars, driven by payments for jobless benefits and COVID-19 relief programs, according to the department. Earlier this month, the Congressional Budget Office estimated that the U.S. budget deficit for fiscal year 2021 would reach 3 trillion dollars,

The June numbers for GST indicate a total collection of Rs 92,849 crore. While this is much lower than record number of Rs 1.41 lakh crore in April, and reasonably well collection of 1.02 lakh crore in May, it is still considered good as it largely records collections made during May, the peak of second Covid wave in India. Given localized and less stringent lockdowns this year, the dent in tax collections seems to have been lesser.

The brokerage report said that despite the position of the current account deficit this year, healthy capital flows will ensure FY22 BoP (balance of payment) remains in a surplus of $ 50 billion. However, global winds may imply foreign investors would start asking for a higher risk premium from EM and it could start pressurizing EM assets, including in India.