NEW DELHI: The Government's bravado on meeting tax collection targets notwithstanding, the revenue department may be looking at a shortfall of up to Rs 2 lakh crore on various counts and may have to crimp on expenditure by discouraging departments from spending on non-essentials.
"We are staring at a black hole of up to Rs 2 lakh crore, though that could moderate with the economy doing better in the second half. However, the fact is that under these circumstances the normal October-November internal review we do for revenue and expenditure targets may well go in for serious revisions," said top finance ministry officials.
The finance minister has already indicated that all welfare spending will go ahead as planned. However, officials say that non-essential spending - on administrative expenses or on projects which will not show results in the short or medium term - may well be delayed.
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With the turmoil in the stock markets scuppering plans for stake offerings in PSUs as well as placing question marks over the telecom players' ability to cough up spectrum and other fees that they owe the Government, this could mean a deficit on these counts to the extent of Rs 20000-30000 crore.
Added to this, revenue department officials said they have long resigned themselves to collecting at least Rs 1.6-1.8 lakh crore less from direct and indirect taxes.
Though finance minister Nirmala Sitharaman told newspersons at an informal briefing earlier this week that her efforts at earning Rs 1.05 lakh crore through disinvestment "was moving comfortably", the fact remains that with more than half the financial year gone, the Government has only earned Rs 12995 crore from disinvestment proceeds till now.
Most of the money, has been raised through floating an equity traded fund – the CPSE-ETF.
Strategic disinvestment of a string of companies ranging from the loss-laden Air India to oil major BPCL are still in the pipeline as are moves to sell equity in PSUs like Oil India.
"Sale of PSU land which is being taken up separately, outright sale of top blue-chip PSUs like BPCL and HPCL or sale of stakes in other blue-chips or even sale of shares in private-sector firms like ITC that the Government has done through SUUTI (Specified Undertaking of Unit Trust of India) will raise money, but the fact is that a volatile market and tight deadline schedules means targets will be nearly impossible to meet," said officials.
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The Government has already hinted that it will give relief to beleaguered telcos and this could mean that its target of raising Rs 50519.81 crore may fall short.
"However that shortfall will not be a big one given the fact that some payments over last year's actual of about Rs 39245 crore will be realised," reasoned officials.
Officials have already calculated that they are likely to see a shortfall of Rs 1-1.2 lakh crore from corporate income tax against an initial estimate of a shortfall by Rs 1.454 lakh crore. Till now the government has managed to raise some 6 lakh crore in direct taxes which include corporate and personal income tax, or less than 50% of the total tax collection target of Rs 13.35 lakh crore for the current fiscal.
Officials said on top of lower-than-expected direct tax collections, indirect tax - GST - collections are also expected to fall short by Rs 60000 crore or so.