Higher Budget deficit looms large this year

Higher Budget deficit looms large this year

The Centre is staring at a higher Budget deficit this year (2017-18) with its revenue mop up expected to remain less than budgeted for. The GST hiccups and lowering of tax rates on several items in the recent times have compounded the woes.

Additionally, the government this financial year will have only 11 months of indirect tax revenue as GST collections for March will be accounted for in the next financial year (2018-19). This is because the due date for payment of the tax for March is April 20. Hence March collections will be reflected only in April.

Finance Minister Arun Jaitley is expected to review the fiscal deficit target for 2017-18 before the month end after his ministry tabulates the revenue collections from GST in November and reviews PSU disinvestment programme.

The GST mop-up has deteriorated month after month since the new indirect tax regime was launched in July this year. The figures for November collection of GST is expected in the week ending December 30.

Officials sources told DH, "the GST collections for November may have slowed down too".

"This is an unusual year when the government is going to make do for 12 months of expenditure with 11 months of indirect tax revenues," Chief Economic Advisor Arvind Subramanian had said recently.

In October, the total revenue collected under GST fell by around 10% to Rs 83,346 crore from over Rs 92,000 crore in September. The GST collections in the first month of implementation (July) were the highest at Rs 94,0000 crore.

The government, in the Budget 2017-18, had set a target of 3.2% for fiscal deficit or the difference between Centre's revenue and expenditure, for this fiscal. Centre's fiscal deficit has already touched 96% of the full year's target in April-October compared to less than 80% in the corresponding period last year.

Though the government has so far adhered to the glide path as far as maintaining the deficit is concerned, Jaitley has sounded a warning note. While replying to the Supplementary Demand for Grants in the Lok Sabha, he said that the government could spend more only either by borrowing more the from the market or by earning higher revenues.

The headwinds are not only on account of indirect tax revenues but also non-tax revenues. This year the Reserve Bank of India (RBI) has transferred less than half of surplus to the Centre's kitty than last year. The RBI in August announced that it will transfer Rs 30,659 crore as surplus. The revnues from spectrum sale have also been muted and the Budgeted PSU disinvestment have not been completed either.

But the recent hike in the customs duty on electronic goods is expected to fetch an additional about Rs 2,000 crore this fiscal. Jaitley will present Union Budget for 2018-19 on February one.

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