The Budget proposal for year 2019-20 projects total expenditure of Rs 27.8 lakh crore against receipt\u00a0of Rs 20.8 lakh crore. This implies shortfall of Rs 7 lakh crore corresponding to 3.4% of GDP. For 2018-19, budget seems to have largely met its target with fiscal deficit being only marginally higher at 3.4% against projected 3.3% of GDP. Here is a look at government\u2019s achievement in revenue mop up against the projections during 2018-19 and proposals for 2019-20.Government\u2019s revenue mobilization can be broadly classified into four groups – Corporation tax, Income tax, Indirect taxes and others. First two groups form part of what is called direct tax. This together with indirect taxes is classified as tax revenue. Tax revenue along with non-tax revenue such as dividends, profits etc are combined together and called revenue receipt. Capital receipt, primarily disinvestment income,\u00a0spectrum sale etc, forms the last dimension of government revenue collection. However, the primary source of receipt is tax revenue (82% share projected for FY20).<\/p>\n
Government appears to have managed substantial widening of tax base and tax compliance as witnessed by the continued jump in revenue collection on these two counts. Corporation tax is projected to reach a figure of Rs 6.7 lakh crore in FY19, up from the original estimate of Rs 6.2 lakh crore. It has recorded increase of 14% CAGR during FY14-19 despite the general slowdown in industrial sector, higher than growth of 12.4% recorded during FY09-14 period. Collection of Income tax is even more significant, estimated to reach Rs 5.2 lakh crore, almost 27% jump over FY18. The continued sharp increase projected in income tax assumes significance on account of large increase in bank deposits post demonetization. Income tax has recorded increase of 21% CAGR during FY14-19 against 15% in the earlier period. For 2019-20, budget projects a sharp increase of 17% in income tax at Rs 6.1 lakh crore whereas corporation tax is projected to reach Rs 7.6 lakh crore, an increase of 13%.<\/p>\n
Indirect taxes consist mainly of GST although customs and excise still account for over one-third of total indirect taxes. Against the original estimates of Rs 11.2 lakh crore, indirect taxes are expected to fall short by about Rs 75,000 crore, largely due to shortfall in GST collection. Still, the net collection corresponds to over 14% increase over FY18. Despite the shortfall in GST collection, total tax revenue at Rs 22.5 lakh crore is only marginally lower than initial projection of Rs 22.7 lakh crore, largely due to higher direct tax collection. (Of this, about 35% is transferred to the states leaving Rs 14.8 lakh crore with the centre). For FY20, government projects total tax collection to reach Rs 25.5 lakh crore, of which, central government\u2019s share would be Rs 17 lakh crore).<\/p>\n
An important trend in revenue collection is\u00a0shift towards direct tax, which is levied on income, from indirect taxes which are levied on production which could go towards consumption, exports or investments. Direct taxes formed only about 26% of revenue collection (direct plus indirect) in FY00 which has now gone beyond 50%.\u00a0Although there are gaps in the hypothesis, yet, direct taxes are considered a better method of taxation since it is proportional to the earnings and not to the consumption (which is taxed through indirect taxes).<\/p>\n
Other than tax revenue, government seems to meet its target of mobilizing about Rs 2.45 lakh crore of non-tax revenue receipt and 0.92 lakh crore of capital receipt. Government\u2019s receipts from dividends & profits are expected to be higher at Rs 1.19 lakh crore during FY19, against original estimates of Rs 1.07 lakh crore. For FY20, projections are slightly higher at Rs 2.72 lakh crore, to be mobilized as higher dividend & profits. Even though capital receipt has shown huge deviation from the projections as disinvestment targets are often missed, the government has managed to meet its target of 0.90 lakh crore after surpassing its projection to reach Rs 1.0 lakh crore in FY18.<\/p>\n
Tax receipt of Rs 17 lakh crore, non-tax revenue of Rs 2.72 lakh crore and capital receipt of Rs 1.02 lakh crore forms the total corpus of Rs 20.8 lakh crore for the government.<\/p>\n
The expenditure side shows\u00a0interest payments as the biggest block accounting for as much as Rs 5.9 lakh crore during FY19, about 25% of total central government budget. The outgo is higher by about Rs 12,000 crore on account of rising bond yields due to monetary policy tightening being done by RBI. This is projected to go up to Rs 6.65 lakh crore in FY20 with higher debt burden as well as higher interest rate scenario. Even though interest payment appears as a big drain on governments resources, its share has actually come down from about 45% of total budget in FY00. With rising size of the economy, increase in productive resources and country gradually moving to a lower interest rate environment like that witnessed in developed countries, this would further come down in the medium term.<\/p>\n
Contd.<\/p>\n","protected":false},"excerpt":{"rendered":"
The Budget proposal for year 2019-20 projects total expenditure of Rs 27.8 lakh crore against receipt\u00a0of Rs 20.8 lakh crore. This implies shortfall of Rs 7 lakh crore corresponding to 3.4% of GDP. For 2018-19, budget seems to have largely met its target with fiscal deficit being only marginally higher at 3.4% against projected 3.3% […]<\/p>\n","protected":false},"author":8,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[857],"tags":[],"class_list":["post-12027","post","type-post","status-publish","format-standard","hentry","category-economy","membership-content","access-restricted"],"yoast_head":"\n