FM faces tightrope walk on tax, fiscal targets
“The government is also likely to have some buffer from capex in the fourth quarter, which as per revised estimates and first nine months’ expenditure is estimated at Rs 1.05 lakh crore,” Pant added.
Apart from these, the government will also need to achieve the disinvestment goal of Rs 80,000 crore to meet the fiscal deficit target. So far, it has raised only Rs 35,100 crore from asset sale in the current year.
There are apprehensions that the slippage on fiscal deficit could be more than the revised figure of 3.4% for the current year, considering that the government may have overestimated the tax revenue growth for 2018-19.
However, the government finds it quite achievable. Finance secretary Ajay Narayan Jha told DNA Money that there could be further improvement in the revenues, given the growth in the direct tax collection. The indirect tax revenue target, too, looks achievable as the expectations are based on the overall growth in the economy, he said.
“Our first year average GST collection was around Rs 85,000-90,000 crore range. This year, this is around Rs 97,000 crore. And this should also be seen in the context large concessions and a number of rate adjustments that were done over the course of the year. But the last year’s collection, which is the December collection reflected in January, raises the expectations that the GST may improve as we go along,” he said.
On fiscal consolidation front, he feels that the government will be on track to meet the commitment of achieving 3% fiscal deficit target by FY21. “This year if you discount the special package for the farmers, we have achieved 3.3% in 2018-19 and below 3.1% in 2019-20,” he said, adding that this should be seen in the context of current growth.
“There is a slightly better buoyancy in taxation because of compliance, and there is also a greater formalisation of the economy. Then, there is also a prospect of GST collections stabilising and improving,” he said.