Seasonal Concentration of Fiscal Aggregates: Case Study of India

Abstract

The phenomenon of seasonal concentration in the context of receipts and expenditures, notable in the Indian context, is an important aspect of fiscal management including borrowing costs. We have studied the pattern of monthly peaks including March bunching by utilizing the HHI index by redefining it for studying seasonal concentration patterns. The empirical counterpart of this study pertains to central finances in India with data drawn from the CGA comprising 300 monthly observations over the period 2000-01 to 2024-25. We find that in the case of net-tax revenue, the phenomenon of March bunching is quite prominent followed by the monthly peaks of June, September and December. In the case of other non-debt receipts, magnitude of concentration is even higher, and it is noticeable in the month of March but also in the earlier half of the fiscal year. Corresponding patterns of concentration are also noted in the case of revenue and capital expenditures. Except for March bunching, revenue expenditures are more evenly distributed, and their local peaks are less prominent. Capital expenditure shows higher magnitudes of concentration. In terms of inter-year comparisons, prior to Covid there was considerable improvement in concentration pattern which has deteriorated since then. It is important to minimize borrowing costs by reducing the extent of concentration within the fiscal year in receipts and expenditures, as well as minimizing the monthly gaps between the two sets of peaks.