The government will meet this year’s fiscal deficit target despite the ongoing process of rate rationalisation under the GST system, finance minister Arun Jaitley said on Saturday after chairing the 31st meeting of GST Council in New Delhi that recommended rate rationalisation for items falling into 17 categories and 6 services.
This rate cut has a revenue implication of Rs. 5,500 crore for the entire year.
“Our indirect tax collection is little behind the schedule and our direct tax collection is little ahead of the schedule. Our non tax revenue also seems to be moving ahead fairly well,” said the finance minister.
In the budget presented on 1st February this year, Jaitley has projected total revenue receipts of the government at Rs. 17.25 lakh crore and also estimated to get Rs. 92 thousand crore from recovery of loans and disinvestment.
The government has pegged its total expenditure for 2018-19 at 24.42 lakh crore requiring it to borrow Rs. 6.24 lakh crore to meet the shortfall between expenditure and receipts which is estimated to be 3.3% of the country’s GDP. However, it has already borrowed around 104% of the budget estimates in the first seven months of this financial year causing concerns that it may not be able to contain the fiscal deficit within the budget estimates in the crucial election year.
In 2017, Jaitley had projected to contain the fiscal deficit to Rs. 5.46 lakh crore or 3.2% of GDP, however, in the revised estimate presented in February this year, the government’s borrowings were around 5.95 lakh crore or 3.5% of the GDP.
Usually tax collections reflect buoyancy in the second part of a financial year, giving confidence to the finance minister to compensate for the extra borrowings due to better realisation of taxes, particularly direct taxes.
Indirect tax collection has registered a growth of 18% during the last fiscal and the government has projected a growth of 15% for this fiscal and it seems on track to achieve the target which is pegged at Rs. 11.5 lakh crore.
“At the moment we are fairly confident that we will meet the target,” said finance minister Arun Jaitley while briefing the media about the decisions taken in the last meeting of the GST council this year.