New Delhi, July 30
The divergent revenue receipt numbers for 2018-19 quoted by the Economic Survey and the Union Budget point to a disconnect between the various departments in the Finance Ministry, according to experts.
A top economist wishing not to be named told the media that with updated indirect tax numbers now available in the post-GST era there is no reason to follow the traditional format of going by the interim Budget numbers.
"There is a new situation. We are now in a pretty better situation than the past. Information flow is very fast now. There seems to be a disconnect between the people who prepared the Economic Survey and the Budget although it comes from the same ministry," he said referring to the diverging revenue receipt figures.
"In the budget document, at some places 11 per cent nominal GDP growth is assumed while it is 12 per cent at some other place. They have estimated 12 per cent GDP growth for fiscal deficit calculations," he added.
The Union budget presented by Union Finance Minister Nirmala Sitharaman quoted the revenue receipt for 2018-19 at Rs 17.3 lakh crore as against Rs 15.63 lakh crore given in the Economic Survey. This created a lot of confusion among public policy watchers as the difference between the two estimates was a staggering Rs 1.67 lakh crore.
Rathin Roy, economist and a member of the Economic Advisory Council to the Prime Minister (PMEAC) recently said that India was facing a silent fiscal crisis owing to a shortfall in tax revenues.
"At the heart of the crisis is a shortfall in provisional tax revenues for 2018-19. It is mainly due to a shortfall in GST revenues (and personal income tax revenues), compared to the numbers presented in the revised estimates," he said.
The higher revenue estimate for 2018-19 is set to have its impact on the fiscal deficit number as and when this figure is revised.
"Since it is for the last year, there is no possibility of cutting expenditure as it has already been done. In that case, the only option left is to accept that we have a higher fiscal deficit than what government has said. I think that is the way it has to," said N.R. Bhanumurthy of the National Institute of Public Finance and Policy (NIPFP).
"Now, accept that your fiscal deficit is not 3.4 per cent. It's 5.8 per cent or whatever the number is," he added.
It may be noted that at the time of interim budget in February this year, the revenue receipt was estimated at Rs 17.30 lakh crore. In May, the Controller General of Accounts (CGA) published the accounts for 2018-2019. It provided the provisional revenue receipts of the government at Rs 15.63 lakh crore. While the Economic Survey gave both the figures, the full budget on July 5 quoted the revenue estimate as given in the interim budget, thereby, creating the confusion.
The lower provisional estimate is primarily on account of less-than-expected GST collection.
The government has been optimistic about the current fiscal too, even as some of the macro indicators suggest the economy is in the grip of a slowdown.
ICRA's Principal Economist Aditi Nayar said that when we compare the 2019-20 revised budget estimates (RBE) with the 2018-19 provisional numbers, the growth rate of revenue receipts and expenditure appears rather high at 26 per cent and 22 per cent, respectively.
Moreover, there are various risks to achieving these forecasts. Direct tax and GST collection realisations, as well as dividends and surplus from the Reserve Bank of India, nationalised banks and financial institutions and state-run enterprises, will be crucial to prevent a revenue slippage in 2019-20.
"At present, we can't rule out that expenditure cuts may be required to prevent a fiscal slippage, if the revenue targets are missed," she said.
