Non-tax revenue growth pegged at 11.2% in FY20, down from 27.3% in FY19

REVVING UP Centre expects ~28K crore interim dividend from RBI; disinvestment target raised to ~90K crore for FY20

The Centre’s nontax revenues are budgeted to increase by 11.2 per cent to ~2.72 trillion in (FY20) 2019-20 (Budget Estimates, or BE), up from ~2.45 trillion in (FY19) 2018-19 (Revised Estimates, or RE), according to the interim Budget. The non-tax revenues are estimated to have grown by 27.3 per cent in FY19 (RE).

Despite a shortfall in dividend proceeds from public sector companies and proceeds from communication services, the government expects to marginally better its non-tax revenue target in FY19, as it expects an interim dividend of ~28,000 crore from the Reserve Bank of India (RBI).

The Centre also upped its disinvestment target to ~90,000 crore in FY20 (BE), up from ~80,000 crore in FY19, which the Centre expects to meet even as concerns over a shortfall linger.

At the aggregate level, the Centre’s non-tax revenues are pegged at 1.3 per cent of gross domestic product (GDP) in FY20, similar to the level in FY19. However, this is lower than 1.82 per cent of GDP in 2015-16.

Under the broad rubric of non-tax revenues, proceeds from dividend/surplus of the RBI, nationalised banks, and financial institutions are expected to rise to ~82,911 crore in FY20, up from ~74,140 crore in FY19 (RE).

In FY19, the Centre had expected to collect ~54,817 crore, implying an increase of ~19,323 crore from the BE. The government has already received ~40,000 crore from the RBI during FY19, Department of Economic Affairs Secretary Subhash Chandra Garg said in a post-Budget interaction.

In comparison, dividends from public sector enterprises and other investments declined from ~52,494 crore in FY19 (BE) to ~45,124 crore in the RE. The government has projected this to rise to ~53,159 crore in FY20.

Revenues from other communication services — that relate to licence fees from telecom operators and receipts on account of spectrum usage charges — are pegged at ~41,519 crore in FY20. Budget documents show that the Centre now expects to mop up ~39,245 crore through this route in FY19 (RE), lower than the target of ~48,661 crore.

The data from the Controller General of Accounts shows that the non-tax revenue collected till November 2018 was ~1.38 trillion, or 56.6 per cent, of the Budget target of ~2.45 trillion.

On the other hand, nondebt capital receipts are expected to touch 0.49 per cent of GDP in FY20, similar to that in FY19. This is lower than 0.68 per cent in 2017-18 (FY18). Under this, the Centre hopes to mop up ~90,000 crore through disinvestment.

So far this year, against a target of ~80,000 crore, the Centre has mopped up ~35,532 crore, or 44 per cent, according to the data from the Department of Investment and Public Asset Management. This has been raised largely through Bharat-22 exchange traded fund (ETF) and Central Public Sector Enterprises (CPSE) ETF and a few buybacks.

In FY18, the total disinvestment proceeds had exceeded the budgeted target of ~72,500 crore to touch ~1 trillion.

The interim Budget notes that proceeds from the disinvestment of government equity in selected CPSEs is channellised into a National Investment Fund. This will be used to finance expenditure on infrastructure projects, in education and health, and investment in railways towards capital expenditure in FY20.