NEW DELHI: With the Union government staring at a revenue deficit of about Rs 2.5 lakh crore, the finance ministry is likely to meet this week to assess the shortfall and discuss a roadmap to move ahead.
“Revenue deficit is a problem. The GST collection had been disappointing. Even non-tax revenue targets are very high. The ministry will be meeting this week to discuss the situation at length,” a senior finance ministry official told TMS.
According to sources, the meeting was scheduled for Monday, but as finance minister Arun Jaitley had to left for the US unexpectedly for treatment of some health ailment, the meeting was postponed for the weekend, when Jaitley is expected to be back.
According to government data, in the first eight months of the fiscal, revenue receipts stood at Rs 8.7 lakh crore or 50.4 per cent of the target, compared with 53.1 per cent in the same period last year. Tax revenue was at Rs 7.32 lakh crore, or 49.4 per cent of the budgetary target against 57 per cent last year. The government is already staring at Rs 70,000 shortfall in indirect tax collection due to lower-than-expected GST collection.
And with more rationalisation of GST rates, the situation is unlikely to improve. According to the finance minister’s own conservative estimates, the government will forego revenue of close to Rs 1 lakh crore just on all the items whose rates have been revised to lower slabs under the GST regime.
Despite the fact that in the last budget the government decided to abandon targeting of the revenue deficit, revenue shortfall will still have a direct bearing on the fiscal health.
The government missed its fiscal deficit target of 3.2 per cent of GDP in 2017-18, with the deficit settling at 3.5 per cent eventually.
Between April-November 2018, the fiscal deficit had hit 115 per cent of the target, and despite assurance from finance minister, the target seems now too ambitious to meet.
“There are several risks to meeting the budgeted targets for revenues and expenditures, with one of the predominant concerns arising from a possible shortfall in indirect tax collections, despite the seasonal pick-up in tax revenues in the last quarter of every fiscal,” Aditi Nayar, Principal Economist, ICRA Ratings, said.