Economic indicators for the Indian economy have worsened year-on-year, with the current account deficit widening to $10.72 billion against $6.3 billion for the first quarter of the year, but total direct tax receipts are still at a healthy 30%. The fiscal deficit has reached 87.7% of the target for the year, with seven months still to go. However the government said on Tuesday, it was on target of at least 7.5% growth for 2008-09.
Fund managers and economists that FE spoke with on Tuesday said the scoresheet would still encourage global investors to put their money into the economy. The current account is worse than Chinas, but better than Brazil and South Africa. Figures released by RBI shows net capital flows were lower at $13.2 billion in 2008-09 than $ 17.3 billion in the first quarter of 2007-08.
The trade deficit, which measures the difference between exports and imports, rose sharply to $31.6 billion in the first quarter of 2008-09, against $ 20.7 billion in April-June 2007-08, largely because of oil imports. The sharp increase in oil imports reflected the impact of the increasing price of the Indian basket of international crude, RBI said.
Other figures released by the finance ministry on Tuesday showed that while direct tax collections were buoyant, the growth rate was hit due to lower-than-expected advance tax collections and also lower collections from personal income tax. The tax is a leading indicator of performance of the corporate sector. The ministry has received Rs 1,48,200 crore from direct tax but this was lower than previous months when the rate was nearly 40%.
Corporate tax collections rose by 34.5% to about Rs 97,500 crore until the end of September. Revenue from corporate taxes increased by 43.5% until the end of August. But advance tax payments by companies until September 15 increased by 20% to about Rs 45,000 crore, almost the same as netted by the exchequer last fiscal in the second phase. Personal income tax collections have risen by 24% to September 30 to Rs 50,522 crore. The finance ministry has a target of Rs 3.95 lakh crore from this tax.
The Centre also faces additional pressure as its expenditure is rising faster than anticipated in an election year. The fiscal deficit is at Rs 1,16,890 crore, just Rs 16,397 crore shy of the full-year figures. The revenue deficit has also shot up to 177.4% of the full fisc target to amount to Rs 97,879 crore in the period. It was 74.9% of the BE a year ago