Govt stares at tax shortfall, but confident of meeting fiscal deficit target
October, 06th 2015
The government is staring at a revenue shortfall of around 5% in the current financial year but is confident of meeting the fiscal deficit target through better management of expenditure, senior officials in the finance ministry said on Monday.
Top secretaries of the finance ministry, led by finance secretary Ratan P Watal, addressed a joint news conference reiterating the strength of the economy and several aspects of Asia's third largest economy. TOI was the first to report on Monday about the finance ministry's plan to hold regular interactions with the media.
Revenue secretary Hasmukh Adhia said the tax target looks ambitious but hopes to achieve it. He, however, admitted that there could be "small shortfall."
While indirect taxes have performed well, rising 36.5% including the impact of the additional revenue mobilisation measures such as new duties and levies, direct taxes have remained sluggish.
"There is likely to be some shortfall in the direct taxes by the end of the year but some part of it will be made good by the indirect taxes and I am very hopeful that if there are no externalities we should be able to achieve our target. Out of the Rs 14.5 lakh crore target, we may reach 14 lakh crore this is the current estimates," Adhia told reporters.
This comes close on the heels of the government saying that choppy markets may prompt it to go slow on disinvestment in state run companies. The government has set an ambitious target of raising Rs 69,500 crore from stake sale in public sector undertakings.
Economic affairs secretary Shaktikant Das said the market was changing from day to day but the government was committed to maximising revenues from stake sale. Watal said the government will aim for better expenditure management to achieve its fiscal goals.
"From the expenditure point of view unlike last year we do not want to go in for any over rationalisation of what you may call expenditure cuts. We want to sustain whatever has been envisaged on the Plan of this year, both on the centrally sponsored schemes and the central sector schemes," said Watal.
He also said the finance ministry was also anticipating the Expenditure Management Commission to come out with suggestions for better management of spending. "These figures we will look at and "I am confident that the 3.9% (fiscal deficit) target will be achieved". said Watal.The finance ministry was also confident of robust growth and expects it to exceed 7.5% in the current fiscal year. The Economic Survey had assumed growth of 8-8.5% in the current year, while RBi estimates growth to be 7.4% slightly lower from its previous forecast of 7.6%. Watal said the country's macroeconomic fundamentals remain strong and India better placed now to handle unforeseen external shocks.
"Despite the global slowdown and declining export demand, India has emerged as the fastest growing major economy in the world. While the government continues to implement its reform agenda, the economy should over time realize its 8% plus growth potential," said Watal.