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Letter to BS: Govt must strike balance between savings and expenditure

The huge shortage in GST collection last year has widened the fiscal deficit

Business Standard 

Budget 2018: Fiscal deficit number to be close to target of 3.2% of GDP

This refers to “No end to the govt’s tax worries” (September 11). The article deals with various factors concerning the challenges of collecting tax revenue. Various data furnished by the author show declining tax revenue over the last two years after the implementation of (GST). The present huge target of tax revenue projected by the author in 2019-20 with 18 per cent growth rate is definitely a herculean task for the government considering the slow rate of tax collections. The huge shortage in collection last year has widened the Hence, the target for this year, of reaching 18 per cent growth rate, appears more stiff and difficult.

Most importantly, the shortage of tax revenue collections has had an adverse impact on the GDP as well as state finances. The shortage of revenue transfer will also be a big blow to the states that are already struggling to meet their revenue targets. The government must find ways to strike a balance between its savings and expenditure to keep to the target of 3.3 per cent of GDP.

Partha Sarathi Mukhopadhyay, Nagpur

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First Published: Wed, September 11 2019. 21:14 IST