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The government's hopes of pushing in a monetary stimulus to revive demand and economic growth is likely to run into hurdles with the fiscal deficit getting dangerously close to its full-year target. In the April-August period, the fiscal deficit came in at Rs 5.25 lakh crore, the highest ever for this period, according to a Business Standard (BS) report on Saturday.

The BS report said that fiscal deficit for the first five months of 2017 stood at 96 per cent of the full-year target of Rs 5.46 lakh crore despite cut in capital expenditure in August. The data was released by the Controller General of Accounts on Friday. "The trend is contrary to the earlier pattern when expenditure was front-loaded, at least for capital outlays," the report said.

For the same period last year, fiscal deficit stood at 76.4 per cent of the full-year target.

The target for the year as a percentage of Gross Domestic Product (GDP) is 3.2 per cent, which is already under stress because nominal GDP growth in 2017-18 might not be 11.4 per cent as assumed in the Budget. For the first quarter, nominal GDP grew only 9.3 per cent, the report noted.

When there has been active discussions within the Narendra Modi government regarding the possibility of issuing a stimulus package, the news of the runaway fiscal deficit figures will come as a dampener to stimulus proponents.

Higher capital spending by the government has been advocated by industry and the analyst community to boost manufacturing and infrastructure and create jobs. However, any fiscal stimulus could lead to a higher-than-budgeted fiscal deficit for 2017-18, the report said.

For April-August, tax revenues were at Rs 3.41 lakh crore, about 28 per cent of the full-year Budget estimates, compared with 26.6 per cent for the same period last year. For the first time, GST figures were taken fully into account. For August, Central GST contributed Rs 15,263 crore to the state kitty.

Aditi Nayar of ICRA was quoted by BS as saying that if lack of clarity on the post-GST buoyancy of revenues after netting of refunds persists over the next two to three months, it may cloud the budget planning process for fiscal 2019.

Non-tax revenue was Rs 69,256 crore, or 24 per cent of the full-year target, compared to 32.5 per cent for April-August last year. "The sharp year-on-year decline in non-tax revenue receipts is likely to reflect the lower surplus being transferred by the RBI," Nayar told BS.

Non-debt capital receipts were Rs 15,534 crore, or 18.4 per cent of the full-year target, compared with 12.7 per cent last year, the report said.

There has been a clear hiatus on the public expenditure front, as revenue expenditure rose just two per cent in August year-on-year. Revenue expenditure for April-August came in at Rs 8.41 lakh crore, about 46 per cent of the full-year target, compared with 41 per cent for the first five months of 2016-17.

The biggest chunk of public expenditure cut was borne by capex, which was down 26 per cent in August on a year-on-year basis. This resulted in capital expenditure of only Rs 1.09 lakh crore, 35.5 per cent of the full-year estimates, down from 37 per cent for the same period last year. Till July, capex was higher in 2017-18, compared with April-July of 2016-17.