The Finance Minister stated in the Budget speech that the slippage in the fiscal deficit numbers for FY18 was partly on account of non-inclusion of the GST collection for March.

When we ran a check on the numbers, we found that had GST collection for March 2018 been accounted for, the fiscal deficit would have been at 3.2 per cent of GDP, the original figure budgeted, despite the higher than budgeted expenditure.

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The changeover to the new tax system, the GST, has meant that the collection for March could not be added to the revised estimates of FY18. This is because GST collection takes place on the 20th of the following month, which will be April 20, in case of GST due for March. Since the Budget is prepared on cash basis, receipts not realised are not accounted for.

In the earlier tax regime, Central Excise and Service Tax for the month of March were paid on the 31st of the month, resulting in the tax collections for 12 months entering the Budget. The changeover has resulted in excluding GST collections for one month, thus causing a statistical deficit this year.

So, what would be the revised fiscal deficit number had the GST collections for the month of March 2018 been added to the revised indirect tax revenue estimates.

GST collection

As per the revised revenue estimates for FY-18, the GST collection of the Centre for eight months from July to February 2018 is ₹4,44,631 crore, which works out to GST collection of ₹55,579 crore per month on an average.

The revised fiscal deficit of 3.5 per cent of GDP for FY-18 was arrived at by dividing the revised fiscal deficit of ₹5,94,849 crore by revised Gross Domestic Product (GDP) for FY18, ₹167,84,679 crore.

Now by including the March 2018 GST collection, the value of fiscal deficit will be reduced to ₹5,39,270 crore (₹5,94,849 minus ₹55,579).

If divide the adjusted value of fiscal deficit by the revised GDP, we get the fiscal deficit of 3.2 per cent of GDP.