‘10% GDP growth a conservative estimate’
The GDP growth and tax revenue forecasts announced in the Budget are realistic and conservative, Economic Affairs Secretary ATANU CHAKRABORTY told
Arup Roychoudhury in an interview. Chakraborty, who contributed to the finance minister’s speech, said NSSF loans are crucial for Food Corporation of India to initiate a clean-up, and the proposed exchange-traded fund for government securities will be launched in H2FY21. Edited excerpts:
What are your assumptions behind the 10 per cent nominal GDP growth rate? Are your real GDP growth estimates similar to those in the Economic Survey?
Overall, a 10 per cent nominal GDP growth rate is a conservative figure. If you look at its break-up, real GDP growth is in the range of 6.0-6.5 per cent, with the inflation component at broadly 3.5-4.0 per cent. This is the range being projected by various agencies. With a conservative lens, these are the numbers that looked plausible.
At 10 per cent growth, how feasible is gross tax revenue growth of 12 per cent and personal income tax (I-T) growth of 14 per cent, despite foregoing revenue of ~40,000 crore because of reductions? Where do you see the growth coming from?
If you look at the numbers on the receipt side, the budgeted estimate for gross tax revenue during FY21, at ~24.2 trillion, is less even than FY20’S budgeted estimates of ~24.61 trillion. This shows the conservatism. We have also been conservative on revised estimates for FY20, at ~21.6 trillion. If you take the revenue foregone, the year-onyear rise has to be much higher than before.
We wanted to be conservative because last year, people were blaming us for being a bit optimistic. These are safe and realistic estimates. We expect some revenue to come in from dispute settlement schemes, including Sabka Vishwas. Naturally, the disputes will get settled and the environment of disputes will also go away, because now a lot of money gets stuck in disputes. Therefore, we are expecting some good amount from that, in spite of foregoing ~40,000 crore in various sops.
Net tax revenue shortfall for FY20 was at 0.7 per cent of GDP, and fiscal slippage was at 0.5 per cent. Did the fiscal slippage entirely compensate for tax shortfall and not for any expenditure?
Just because it’s fungible, how can you say it is meant just for that? This year, we knew that growth rates were coming down and this was a good opportunity for the government to ensure efficient and quality expenditure. Hence, the entire capex was up-fronted. If you see our capex at December 2019 vis-à-vis December 2018, it was 16 per cent higher.