Even with the Centre expecting to face significant shortfall in mop-up from taxes and disinvestment in the current fiscal, it will partly make up via unexpected revenues from a tax dispute resolution scheme, Supreme Court mandated payments related to adjusted gross revenue (AGR) from telecom companies and higher-than-Budgeted dividend payout from the RBI.
Reduction in expenditure by ministries in the last quarter of the current fiscal, as suggested by the Union Finance Ministry, would further help in cushioning the fiscal situation. Analysts note the revenue loss from corporate tax rate cut announced last September will not be more than Rs 70,000-80,000 crore, as against Rs 1.45 lakh crore estimated earlier by the government.
Though a breach in fiscal deficit is being anticipated, these steps combined would help contain its quantum. Rough calculations suggest the government may get Rs 2.36 lakh crore from these unexpected revenue sources, while the shortfall from taxes and disinvestment is Rs 3.10 lakh crore, resulting in a fiscal deficit of around 3.7 per cent of GDP, which could even slip further, given a lower 7.5 per cent nominal GDP growth rate projected in the government’s first advance estimates. The Budget had pegged fiscal deficit at 3.3 per cent of GDP for 2019-20. In a report on economy on Wednesday, India Ratings & Research said it expects shortfall in tax and non-tax revenue to result in the fiscal deficit slipping to 3.6 per cent of GDP.
The highest collection among the unexpected sources would likely come from payments by telcos, even though they have sought a review of the payment deadlines from the SC. The payout by all telcos combined could be as high as Rs 1.43 lakh crore after the dues for spectrum usage charges (SUC) linked to AGR is taken into account.
In a reprieve to Bharti Airtel and Vodafone Idea among others, the Supreme Court Tuesday agreed to hear their plea seeking permission to negotiate the timeline for payment of AGR with the DoT next week. As of July last year, Airtel had to pay nearly Rs 21,682 crore in AGR dues, while the combined entity of Vodafone Idea has to shell out as much as Rs 28,308 crore. Reliance Communications, which is currently undergoing insolvency proceedings, owed the government about Rs 16,456 crore as of July 2019. The court’s judgment on AGR had impacted non-telecom public sector enterprises, such as GAIL, Power Grid, Delhi Metro Rail Corporation and RailTel, which are contesting the levy.
The government will also get an additional Rs 58,000 crore, compared to Rs 90,000 crore accounted for as surplus transfer from the RBI in the Union Budget 2019-20 for spending in the current financial year. The government is also expecting Rs 35,000 crore under the Sabka Vishwas (Legacy Dispute Resolution) Scheme. Finance Minister Nirmala Sitharaman, last week, said “about Rs 35,000 crore has been settled” for cases related to excise and service tax regime.
Citing fiscal situation, the Finance Ministry last month cut the amount various ministries and departments can spend in the last quarter to a maximum of 25 per cent of their Budget estimate for the entire financial year, as against the earlier limit of 33 per cent. The Centre is also expected to miss on its target from disinvestment collections. In this year’s Budget, the government has set a disinvestment target of Rs 1,05,000 crore, compared to Rs 80,000 crore in 2018-19. However, the Centre has raised only Rs 18,094.59 crore so far.
📣 The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines