NEW DELHI: The government will have a tough job maintaining its fiscal deficit target given the fact that revenue slippages show no signs of abating.
According to top finance ministry officials, the revenue slippage in tax collections is likely to be Rs 1.6-1.8 lakh crore, partly on account of the tax give away resulting from a cut in corporate taxes and partly because of lower GST collections.
At the same time, it is likely to be difficult for the government to make up the numbers by stepping up the disinvestment target or by selling airwaves, given market uncertainties.
“The corporate tax give-away will be contained at about Rs 1-1.2 lakh crore, instead of the Rs 1.45 lakh crore we had earlier calculated, given the fact that there will be some positive effect on corporate profits of the tax give-away by the fourth quarter of this year, which we may even witness in the third quarter itself,” officials said.
Direct tax collections from April-September were 4.7 per cent higher than last year against a target of a growth of 17 per cent.
Meanwhile, GST collections are expected to fall short by Rs 50,000-60,000 crore for the fiscal, with collections in September dipping sharply to a 19-month low of Rs 91,916 crore, way below the monthly target of Rs 1 lakh crore.
“We may be able to contain (revenue slippage) even more given that self-declaration for claims will now have to be backed by actual invoices by suppliers,” said officials.
A rule change has said that only 20 per cent of tax credit claimed will be paid unless backed by invoices and bills of suppliers.
However, if sufficient extra resources cannot be mobilised, as many feel will be the case, the government would have little recourse left but to do one of two things.
Borrow far more than it has said it will, or do something it has not done for quite some time: print extra money.
Rock and a hard place
Slippage in tax collections is likely to be H1.6-1.8 lakh crore, partly on account of the tax give away resulting from a cut in corporate taxes and partly because of lower GST collections.
At the same time, it is likely to be difficult for the government to make up the numbers by disinvestment or selling airwaves, due to uncertain market conditions