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Fiscal deficit to revenue target: Crunching the Budget numbers

With GST revenues coming well below expectations, the Centre failed to meet its budgeted fiscal deficit target yet again

Ishan Bakshi 

Interim Budget 2019. Piyush Goyal

The Central government has projected its gross tax revenue to touch 12.2 per cent of gross domestic product (GDP) in the financial year 2021-22 (FY22). But as seen in chart 1, while the Centre had projected tax revenues to touch 12.1 per cent of GDP in FY19, Revised Estimates peg the collections at 11.9 per cent, owing to a shortfall in the goods and service tax (GST) collections.

On the other hand, non-tax revenue, which includes dividend and profits from public sector companies and the Reserve Bank of India as well as the revenue from communication services, is expected to remain at the same level in coming years, as shown in chart 2.

With GST revenues coming well below expectations, the Centre failed to meet its budgeted fiscal deficit target yet again. As against the target of 3.3 per cent of GDP in FY19, the deficit was higher at 3.4 per cent. For the next year too, the fiscal deficit has been pegged at 3.4 per cent of GDP. As shown in chart 3, the Centre now expects to bring down the deficit to 3 per cent of GDP by FY21. The Centre has maintained the revenue deficit target at 2.2 per cent of GDP for FY20, projecting it to decline to 1.5 per cent by FY22, as shown in chart 4. On the other hand, the primary deficit is expected to be brought down to zero by FY22, from 0.2 per cent of GDP in FY20, as seen in chart 5. The Centre also hopes to bring down its debt to 43.4 per cent in FY22, from 48.8 per cent currently, as seen in chart 6.


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First Published: Sun, February 03 2019. 22:55 IST