Despite repeated assurances,
India will not be able to narrow fiscal deficit to the
targeted 3.3 per cent for 2018-19 of GDP on a shortfall in
indirect taxes and non-tax revenues, a report said Monday.
Fiscal deficit, a key factor determining the
macroeconomic health, will come at 3.5 per cent of GDP for
FY19, domestic ratings agency India Ratings and Research said.
This will be the third consecutive year that the fiscal gap
number will be at 3.5 per cent, it said.
The deficit, which is the difference between the total
revenues and expenditure of the government, will come at Rs
6.67 lakh crore as against the budgeted Rs 6.24 lakh crore.
"The pressure on government finances is mainly arising
from the revenue side, particularly from indirect taxes and
non-tax revenue," the agency, a part of the Fitch Group said.
A tax revenue shortfall of Rs 22,400 crore is expected
on the indirect tax front, it said, adding that since the
introduction of Goods and Services Tax in July 2017, a large
part of the indirect tax revenue is being subsumed under GST.
It added that even though the introduction of e-way
bills has helped the government plug leakages in GST
collection, aggregate indirect tax growth came at only 4.3 per
cent for the first half of FY19 as against a 22.2 per cent
target for the full fiscal.
The non-tax revenue is also expected to be lower by Rs
16,200 crore than the budget estimate of Rs 2.45 lakh crore,
it said, attributing this to lower dividends from state-run
enterprises and RBI, lower receipts from communication
services and lower divestments.
In case of RBI, it said the central bank has provided
an interim dividend from its FY18 profits to the Government
before March 2018 and hence the dividend receipts
will be lower.
On divestments, it said only Rs 15,247 crore has been
realised in the first half as against a budget target of Rs
It said revenue expenditure growth in the first half
has been lower than the budgeted figure, but faces pressures
due to a steep increase in the minimum support price of kharif
crops and the implementation of Ayushman Bharat scheme.
"By reducing capital expenditure, the government will
again try to reduce the adverse impact of both increased
revenue expenditure and shortfall in receipts on the fiscal
deficit," it warned.
The government has been repeatedly saying that it will
meet its commitments under the fiscal consolidation roadmap.
Last Saturday, finance minister Arun Jaitley had said that the
Centre does not need money from RBI to meet the fiscal
The gap had touched 95 per cent of the budget level
for the first half of the fiscal year, at Rs 5.94 lakh crore.
PTI AA DSK
(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)