An insight into the deteriorating quality of budget balancing in India

Officials say off-budget borrowings will be reduced eventually, but not any time soon

Even before the Covid-19-induced shutdown, India was already witnessing a demand and consumption slowdown across sectors. This had an impact on the tax and divestment revenues, while non-tax revenues were saved by the Reserve Bank of India’s record transfer of reserves to the centre.

While presenting the 2020-21 Union Budget, Finance Minister Nirmala Sitharaman revised gross tax revenue estimates downwards for 2019-20 by a staggering Rs 2.97 trillion to Rs 21.63 trillion. Divestment targets were cut to Rs 65,000 crore from Rs 1.05 trillion. However, total expenditure was cut by just around Rs 88,000 crore.

Citing the slowdown, Sitharaman expanded