NEW DELHI: North Bloc’s mandarins are in a tizzy in trying to figure out how to raise revenues for the largest ever spending budget planned by the Narendra Modi-led central government. While the political leadership has let it be known that the spending budget, especially on infrastructure and social welfare has to be ramped up to help the Indian economy bounce back, the winning formulae for raising resources for this budget expected to be about 8 per cent over last year’s is yet to be worked out. Till November-end this year, the government managed to raise just 40 per cent of its projected revenue receipts.
As far as non-tax revenues are concerned, it managed to raise just 32 per cent of its projections for 2020-21. “The shortfall will be massive this year— some Rs 3-4 lakh crore … next year we can hope at best to equal the targets set for this year given our recovery rate,” said officials. This current year’s revenue target was `20.20 lakh crore. However, the disinvestment target of Rs 2.1 lakh crore which looks nowhere being fulfilled, officials say, will alone cause an estimated hole of about Rs 1.5 lakh crore in the total revenue receipts.
The government will still be looking at an aggressive disinvestment programme next year, besides increases in customs duties to raise more revenues in the coming year. But officials are unsure how that will play out. Some of the increase in custom duties could have to be sacrificed as India negotiates trade pacts with the US and European Union, its largest trading partners.
“The maths have been done for revenue collections, but there are doubts about meeting targets … while in other years, lower than expected revenues simply meant curbing expenses towards the end of the year. This year we have to ensure spending or risk retarding the growth bounce back,” according to officials. The size of the economy in 2019-20 was about Rs 145.66 lakh crore at 2011-12 prices.
India Ratings estimates India’s GDP will contract by 7.8 per cent this year and be about Rs 134.33 lakh crore. Even if it grows by 9.6 per cent as is being forecast, the economy will grow to just Rs 147.17 lakh crore in 2021- 22. “Revenues, especially tax revenues are a fraction of the total economy and depend on how well the economy is doing. We cannot hope to raise large resources during a period when the economy is in recovery mode,” said officials.