For the first time in 8 years, India’s fiscal balance turned from deficit to surplus in the month of August, the latest data from the Controller-General of Accounts (CGA) show. The fiscal deficit, the excess of the Centre’s expenditure over its revenues, was (-) Rs. 15,808 crore in August.

The negative figure indicates surplus of revenues over expenditure. In contrast, the Centre ran up a fiscal deficit of Rs. 73,005 crore in August 2014.

Surge in revenue

A sharp surge in the Centre’s revenue receipts as well as a steep decline in its total expenditures made the fiscal surplus possible.

The total revenue was Rs. 1,47,022 crore in August against Rs. 71,578 crore in July. In contrast, the total expenditure in August was Rs. 1,31,214 crore against Rs. 1,69,986 crore in July.

August’s surplus, though, is not wide enough to offset the Centre’s fiscal deficit year to date.

During the first five months of the current financial year from April to August, cumulatively its fiscal deficit was Rs. 3.69 lakh crore, which is lower than the Rs. 3.97 lakh crore in the corresponding period last year.

The cumulative fiscal deficit, at 66 per cent of the full-year budget target, is one of the lowest in four years. Last year, the Centre had reached 75 per cent of its full-year budget target by the end of August. The improvement this year is despite a lower realisation of revenues from the disinvestment route. Finance Minister Arun Jaitley had laid down in the budget a target of 3.9 per cent of GDP for this year’s fiscal deficit.

The healthy 22.8 per cent growth in gross tax revenues so far this year along with the 12 per cent reduction in the subsidy outgo have contributed to the improvement in the Centre’s fiscal position. Also, the Centre’s total receipts are significantly higher this year on the back of the Rs. 66,000-crore dividend from the RBI , which is the highest in its 80-year history and 22 per cent more than it paid last year.