KEY TAKEAWAYS

The interim budget has promised major sops without an increase in the fiscal deficit figure for 2019-20. This merits an examination of the fiscal math in the budget. The estimated growth in revenue receipts for 2019-20 is less than what it was in 2018-19. There is a big increase in expected growth in capital receipts. Capital receipts can be one-time gains and it may not be prudent to use them to fund recurring expenditures. There is a 5.4 percentage point shortfall in income tax collection for 2017-18. As RE and BE income tax figures have been the same for past two years, a shortfall cannot be ruled out for 2018-19 as well. For a government that prides itself for widening of the tax base, the shortfall is intriguing. This could be the result of overestimation of nominal GDP figures which drive tax collection. The difference between current and constant prices growth in GDP used to move in tandem with inflation growth earlier. This trend has reversed in the last two years. It could add to the controversy on estimation of GDP figures in the country