Budget 2020: Fiscal deficit targets based on unrealistic assumptions

The Budget  was presented in the backdrop of declining growth and a demand slowdown. The quantum of deficits has been worked out on the assumption of 10 per cent nominal GDP growth in FY21 and 12.0 per cent growth in gross tax revenue. This means gross tax revenue collection buoyancy has been pegged at 1.2x. Growth in corporate tax, income tax, GST has been assumed at 11.5 per cent, 14.0 per cent and 12.8 per cent respectively. 

Achieving 10 per cent nominal growth and 1.2x gross tax revenue buoyancy appears stretched. The pressure is likely to come from GST (12.8 per