Govt has fiscal capacity to support capital expenditure #fiscal #capacity

New Delhi, Jan 31 : The government has the fiscal capacity to maintain the support, and ramp up capital expenditure when required, said the Economic Survey 2021-22 which was presented in Parliament on Monday.

The strong revival in revenues also provides the government with fiscal space to provide additional support as well, if necessary.

The fiscal support given to the economy as well as the health response caused the fiscal deficit and government debt to rise in 2020-21.However, there has been a strong rebound in government revenues in 2021-22 so far.The revenue receipts of the central government during April-November 2021 have gone up by 67.2 per cent (YoY), as against an estimated growth of 9.6 per cent in the 2021-22 Budget Estimates.The tax collections have been buoyant for both direct and indirect taxes.

The gross monthly GST collections have crossed Rs 1 lakh crore consistently since July 2021.On account of a sustained revenue collection and a targeted expenditure policy by the government, the fiscal deficit for April-November 2021 has been contained at 46.2 per cent of Budget Estimates (BE) which is nearly one third of the proportion reached during the same period of the previous two years (135.1 per cent of BE in April-November 2020 and 114.8 per cent of BE in April-November 2019).The primary deficit during the period April to November 2021 turned up at nearly half of the level it had reached during April to November 2019.

"This implies that the Government has the fiscal capacity to maintain the support, and ramp up capital expenditure when required.The strong revival in revenues also provides government with fiscal space to provide additional support as well, if necessary," the Survey said.

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