Budget 2018: Crimps on non-tax revenues, says chief economist Devendra Pant

The Budget pegs FY19 fiscal deficit at 3.3 per cent of GDP. At the core of this, nominal GDP growth would be 11.5 per cent. Tax revenue receipts growth of 14.63 per cent looks plausible. In FY18, lower non-tax revenue from dividends and profits was responsible for 74.5 per cent slippage in the fiscal deficit.

Aggregate non-tax revenue is budgeted to grow 3.86 per cent in FY19 against a contraction of 13.51 per cent in FY18. The share of dividend and profits (Rs 1,073.12 billion) has been budgeted at 43.78 per cent and receipts from economic services at 36.55 per cent of non-tax revenue, respectively. Realising non-tax revenue targets crucially hinges on these two heads.

Devendra Pant, Chief Economist, India Ratings

Dividend/surplus of the RBI, PSBs and financial institutions is budgeted at Rs 548.17 billion in FY19 against Rs 516.23 billion in FY18. In view of bank recapitalisation, and note ban-related cost pressures waning, the probability of achieving Rs 1,073.12 billion dividends and profits from PSUs, RBI, PSBs and financial institutions in FY19 is high. 

Revenue pressure may emerge from the non-tax revenue head — mainly licence fees from telcos and receipts on account of spectrum usage charges. Based on the present position of the telecom sector — low revenue growth and elongated/deferred spectrum payments to the government — this Budget head may see some slippage in FY19.