Even as speculations are rife that the government is sharply falling short of its tax collection target for the financial year 2018-19, the monthly accounts of the central government for February show that the fiscal deficit of Rs 8.51 lakh crore is now 134 per cent of the revised estimate of Rs 6.24 lakh crore.
Though the government has managed to keep its spending on 'check' as expenditures have reached 89.4 per cent of the revised estimate of Rs 21.41 lakh crore, revenue collections have only been 73 per cent of the revised target of 17.3 lakh crore. Even if the government manages to spend less than the target, it needs to at least achieve the revenue collection target if it wants to keep the fiscal deficit at 3.4 per cent of the GDP.
But tax collections have not been keeping pace with the government's estimates, as February accounts show tax collections have been 74 per cent of the revised estimate (net of states' share) of Rs 14.84 lakh crore. With only March tax collection figures left to be accounted for, it seems it will be difficult for the government to receive almost a quarter of the targeted tax revenue during the month.
Dr. Devendra Kumar Pant, Chief Economist, India Ratings and Research (Fitch Group), said: "FY19's (April-February) fiscal deficit at 134.2 per cent of the revised estimate is originating mainly from receipt side. The revenue receipts in FY19 (April-February) were 73.2 per cent of revised estimates. The slow pace of tax collection would keep pressure on fiscal deficit. A higher GDP number, than the one used in the budget, will help the government in inching closer to FY19 fiscal deficit at 3.4 per cent of GDP."
The gross (including states' share) revised tax collection estimate for the year is Rs 22.45 lakh crore, which is lower than the budget estimate of Rs 22.71 lakh crore. As per the revised estimate, the government expects Rs 12 lakh crore from direct taxes and the rest from indirect taxes including GST, excise and customs duty.
The direct tax collection targets, which were revised upwards by Rs 50,000 crore, are now unlikely to be achieved. A direct tax department official told Business Today that the direct tax collections may be close to the budget estimate of Rs 11.5 lakh crore if not the revised estimate of 12 lakh crore.
While GST collection target of Rs 7.43 lakh crore always looked a little ambitious, the government was very sanguine on direct tax collections, and accordingly raised the revised estimate by Rs 50,000 crore to partly compensate for the Rs 1-lakh crore downward revision in the GST collections. The government revised the GST collection target downward for the year, from Rs 7.43 lakh crore to Rs 6.43 lakh crore.
Though GST collections rose sharply in March with monthly collections going up to Rs 1.06 lakh crore, the biggest monthly collection so far, it would still be difficult for the central government to achieve the revised GST collection target.