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Wednesday, July 18, 2018

Tax revenue growth may slide to 10 pc in next fiscal

The government is expecting the tax collection in the next fiscal to go down — it estimates a growth of mere 10 per cent,according to indications given by the finance ministry....

Written by Priyadarshi Siddhanta | New Delhi | Published: February 10, 2009 1:37:49 am

The government is expecting the tax collection in the next fiscal to go down — it estimates a growth of mere 10 per cent,according to indications given by the finance ministry. The growth in receipts until January was already lower than the annual growth target of 17.6 per cent,triggering concerns that revenues could miss the budget target. The government might increase its budgeted fiscal deficit target for this fiscal,sources said.

Tax collection has already contracted by 13 per cent in October,15 per cent in November and 25 per cent in December over the previous 12 months,available data shows.

Indications are that flagship programmes would receive additional allocation of around 38,000 crore as gross budgetary support (GBS) for the next fiscal out of Rs 2,85,000 crore GBS being worked out. This means that out of Rs 71,000 crore GBS for the first quarter of the impending fiscal,nearly Rs 10,000 crore will be pumped in these ambitious programmes,sources said. The decision to give hike to the ministries like rural development,agriculture and health,which are executing these flagship programmes,is aimed at denying the non-UPA ruled states any opportunity to cry foul on paucity of funds and make an issue out of it in the run-up to the general elections.

Even Planning Commission justifies substantial increase in the allocation for social sectors in the interim Budget. Planning Commission deputy chairman Montek Singh Ahluwalia said,“Keeping pace with the increased overall expenditure target in the 11th Plan,we are hopeful that the next year budget including the vote-of-account will reflect the allocation to various sectors.” The stakes of Manmohan Singh government are very high in flagship programmes such the ambitious National Rural Employment Guarantee Scheme (NREGS),Bharat Nirman,Jawaharlal Nehru National Urban Renewal Mission (JNNURM) etc. Sources said that ministries such as defence,civil aviation,post,IT,telecom,information & broadcasting,commerce,textiles,steel,coal and mines would see no increase in their budgetary allocations

in the interim Budgetimplying that the last year’s allocations would maintained in tact.

This proposal has already generated resentment among the affected ministries as they will have virtually nothing to give further impetus to the sectors they are responsible for. They argue that in real terms it would mean reduction in outlay,as even inflation has not been neutralized.

Of the total revenue envisaged by the government,states are likely to be asked to work out their projections for the next fiscal to nearly 10 per cent revenue through taxes. According to sources,Prime Minister Manmohan Singh is under pressure from many economic ministries to create some window for additional funding to counter slowdown. They even do not agree with the finance ministry to build the budget with a fiscal deficit of 5 per cent. They do not rule out provision of additional Central assistance so that sufficient funds are available for maintaining the pace of capital expenditure.

With fiscal deficit expected at 5 per cent,the budgetary support being mooted in the interim Budget is being allocated in a manner that vote-catching schemes continue to received a major boost.

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