Drop in GST collection: Govt certain to cut expenditure

The Goods and Services Tax (GST) collections have dropped again in November.

The figure is a little over Rs 97,000 crore, from a high of Rs 1.007 lakh crore in October, making it almost certain for the Centre to cut its annual capital expenditure from the Budgeted level.

An official statement said that the total GST revenue collected in November stood at Rs 97,637 crore of which the share of Central GST was Rs 16,812 crore, State GST Rs 23,070 crore, Integrated GST was Rs 49,726 crore.

This included Rs 24,133 crore collected on imports and Rs 8,031 crore through cess.

A fall in the GST revenues indicates the Centre’s tax revenues may not keep up its pace this year.

The non-tax revenues have already been very low with disinvestment fetching only about Rs 10,000 crore against the estimated Rs 80,000 crore in the current fiscal ending March 31.

Revenues from spectrum are also likely to fall short of the target by around Rs 20,000 crore.

The direct consequence of this fall in revenues would be a breach of the Centre’s fiscal deficit target of 3.3% this year.

However, if the finance ministry mandarins are to be believed, come what may the budget deficit will not be breached.

This means that the Centre will resort to spending cut on social sector schemes and also defence, if need be.

Sources said that the expenditure cut could be to the tune of Rs 50,000 to Rs 65,000 crore as an uncertainty on indirect tax revenue looms.

On Friday, the Centre had released the fiscal deficit numbers which renewed the fears of fiscal slippage as the tax revenues remained muted.

In the first seven months from April to October, the Centre had breached its full year fiscal deficit target.

At the end of October fiscal deficit was Rs 6.49 lakh crore or 103.9% of the full year target.

Last year, in the first seven months, the budget deficit was 96.1% of the full year estimates and the government had missed the budgeted fiscal deficit target of 3.2%.

GST collection was estimated to be Rs 1 lakh crore every month in 2018-19 but so far, only two months have given a revenue of over Rs 1 lakh crore.

And a rough calculation suggests that even if the government collects Rs 1 lakh crore in each of the coming months before April 1, it will not be able to meet the target.

According to the India Rating’s report, the government might end the financial year 2018-2019 with a 3.5% fiscal deficit.

Talking to DH, former RBI Governor Bimal Jalan, however, said if the quality of expenditure incurred by the government was good, breaching the fiscal deficit by small margin, would not matter much.