Fiscal deficit target challenging as only half the indirect tax collection aim met in April-November; govt banks on divestment and cut in food and oil expenditure to bridge the gap
Even as finance minister Arun Jaitley has rolled up his sleeves for preparing Budget 2015-16, he is likely to face fiscal constraints on announcing tax leeways and public expenditure as the revenue numbers in the first eight months have not been encouraging.
During April-November, the government achieved only 52%, or Rs 328,662 crore, of the targeted revenue of Rs 623,244 crore on the indirect tax front, which means that the government has only four months to achieve 50% of the targeted sum.
These numbers assume significance as the fiscal deficit has reached 83% of the target for this fiscal in the first six months itself.
While finance ministry officials say the situation may hurt the fiscal deficit target for the current fiscal, they feel that the last quarter will be comfortable as far as collections are concerned.
A finance ministry official told dna, "At the moment, it appears that the government's hands are tied as far the big announcements on the tax front and other expenditure in the budget are concerned as it may impact the deficit target. But we hope that the revenue collection figure will improve in the last quarter of the fiscal, thereby providing the government the requisite maneuverability."
The NDA government inherited from the previous UPA regime an economy riddled with high deficits and inflation. On the indirect tax front, service tax collections have remained subdued in the first eight months of the fiscal.
Service tax collections have increased 11.5% from Rs 91,982 crore in April-November 2013 to Rs 102,592 crore during April-November 2014. However, this is just 47.5 % of the target fixed in the budget for 2014-15 at Rs 215,973 crore.
Customs collections at Rs 123,308 crore during April-November 2014 rose 10.2% over the same period last year. This translates into 61.1% of the targeted revenues for 2014-15 at Rs 201,819.
Savings on the food bill and softening of crude oil are now being counted upon by the finance ministry mandarins as a breather to save the fiscal. Also, the government has finalised plans to sell a part of its stake in Coal India, ONGC and NHPC under its disinvestment programme for 2014-15 targeted to mop up Rs 58,425 crore. As per the Action Plan of 2014-15 on Disinvestment, Coal India, ONGC and NHPC have been approved for divestment.
Yawning gap 52%, or Rs 328,662 crore, of the targeted indirect tax target achieved so far
Service tax: 11% rise at Rs 102,592 crore during April-November 2014 47.5% of the target for this fiscal met
Customs: 10.2% increase at Rs 123,308 crore in first eight months of this fiscal 61.1% of the targeted revenues for 2014-15