Government expenditure pattern note:
• Govt. expenditure in months preceding the advance tax outflows is comparatively less that is why liquidity deficit persists for a time period until and unless govt. deploys and pour in the system.
• Govt. expenditure is comparatively very high in March as funds allotted to ministries are deployed at the last moment. It was observed that major decisions and spending clearances are done/taken in last week of March to consume the spending target of the year.
• We can also note that Standard Deviation of Govt. expenditure on proportionate basis is very low which says govt. is quite consistent as far as its spending is concerned.
• Govt. has been asking the ministries to spend uniformly across the uniformly across the year. Hence from last few years spending in months like Jun, Jul, Aug, Feb has increased.
Government Income pattern note:
• Advance tax inflows during March, June, September and December contribute nearly 55-65% of government’s budgeted revenue.
• Again here as well SD of Govt. income on proportionate basis is very low which says govt. income is quite consistent. This consistency (on proportionate basis) helps asset managers and bankers to configure their liquidity model with optimum accuracy.
• Advance taxes are collected in four installments — 15% by 15 June; 40% by 15 September; 75% by 15 December and 100% by 15 March.
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