NEW DELHI: Faced with a shortfall of both tax and non-tax revenue collections, the Centre may to exceed its borrowing target by Rs 1.75 lakh crore for FY21.“The initial indication suggests that revenue collection will be nowhere close to the target. Also, the divestment target for the current fiscal is too ambitious. In this context, the government is likely to exceed its borrowing target,” said a senior official from the finance ministry.
Finance Minister Nirmala Sitharaman had in her budget for 2020-21 pegged gross borrowing in the new financial year at Rs 7.8 lakh crore, higher than Rs 7.1 lakh crore estimated in the current fiscal. The government had planned to borrow Rs 4.88 lakh crore for April-September. Gross borrowing includes repayments of past loans. However, officials noted that initial calculations from the internal assessment indicates that this target might exceed Rs 1.75 lakh crore.
“When the Budget was announced it had not taken into account the devastating impact of coronavirus. Now there are new economic realities and the government needs to shore up resources to manage the economic fallout of the Covid-19 pandemic,” the official added.The Budget had pegged fiscal deficit at 3.5 per cent for the next fiscal, down from 3.8 per cent of the GDP in the current fiscal. Even before the lockdown was imposed, experts, however, had flagged concerns over achieving this target, mainly on account of a slowing economy.
Direct tax collections for FY20 stood at Rs 10.27 lakh crore, missing even the revised tax estimate of Rs 11.7 lakh crore by Rs 1.42 lakh crore, and even fell 8 per cent short of the Rs 11.17 lakh crore collected during FY19. The government had already missed its divestment targets for last fiscal year. The situation has only worsened since then. The over one month lockdown, imposed to contain the corona virus has raised fresh challenges for the economy, which is expected to grow below two per cent, even by the most conservative estimates.