With less than a month left for the Union Budget, here's a look at how key economic numbers have changed between the last budget and the upcoming one
Finance minister Nirmala Sitharaman is set to present Union Budget 2020 — her second — on February 1. With less than a month left for the budget, here's a look at how key economic numbers have changed between the last budget and the upcoming one:
Budget 2019: In her last budget, which was presented on July 5, 2019, after PM Modi-led NDA formed the government for the second term, FM Nirmala Sitharaman had revised the fiscal deficit target to 3.3 percent of GDP from an earlier 3.4 percent for 2019-20.
Now: Several reports and experts say that the government is likely to miss its fiscal deficit target of 3.3 percent and that the actual number may be anywhere between 3.5 percent and 3.8 percent.
DBS Group Research, in an interview with CNBC-TV18, had said that it expects the fiscal deficit to remain between 3.5 percent and 3.6 percent for the financial year 2020.
Moody's, after the budget announcement on July 5 last year, had said that there were risks of India missing the deficit target if tax revenue falls short of the projection — a case which seems quite likely now.
In fact, government officials too have acknowledged the same. A report by Business Standard in December, citing government officials, said that India is indeed likely to miss its fiscal deficit target for this financial year.
Budget 2019: The government had proposed to spend Rs 27,86,349 crore in 2019-20, 13.4 percent above the revised estimate of 2018-19.
Now: A Reuters report on Tuesday said that the government is likely to cut spending for the current financial year by as much as 2 trillion Indian rupees (Rs 2 lakh crore) as it is facing tax shortfall, which is likely to affect its fiscal deficit target.
"The government has spent about 65 percent of the total expenditure target of 27.86 trillion rupees till November but reduced the pace of spending in October and November," the report said, citing government data, adding that a 2 trillion-rupee reduction would be about a 7 percent cut in total spending planned for the year.
Budget 2019: The total indirect tax collections were estimated to be Rs 11,19,247 crore in 2019-20, of which, the government had estimated to raise Rs 6,63,343 crore from GST, out of which, Rs 5,26,000 crore was estimated to come from Central GST. The collections from taxes on firms were expected to jump by 14.2 percent in 2019-20 over the revised estimate of the previous year, and those on individuals by 7.6 percent — Rs 7,66,000 crore and Rs 5,69,000 crore, respectively.
Now: There are concerns that the government may fall short of the tax revenue. The revenue department has launched measures to boost tax collections for the next four collection months, asking senior officers to achieve targets.
Direct tax collections, as of November, crossed only Rs 5 lakh crore against the target of Rs 13 lakh crore. While the Central GST collection, as of November, stood at Rs 3.26 lakh crore, against the govt's target of Rs 5,26,000 crore.
The collections of GST for the month of November, collected in December, crossed Rs 1.03 lakh crore, sources told CNBC-TV18 earlier.
The centre, in December, set an ambitious Rs 1.1 lakh crore monthly GST target for the remaining four months of the current fiscal and asked taxmen to step up efforts to achieve the goal.
Revenue Secretary Ajay Bhushan Pandey, in a meeting held with top tax officials, had also said that of the remaining four months, Rs 1.25 lakh crore collections have to be achieved in at least one month.
Government officials, on the condition of anonymity, told CNBC-TV18 that the collections will be better in December. However, some reports claim the government may miss the target.
Budget 2019: Sitharaman, in Budget 2019, had pegged India’s nominal gross domestic product (GDP) growth rate at 12 percent for 2019-20.
Now: A survey conducted by CNBC-TV18, ahead of the first advance estimates of the FY20 GDP, hinted at real GDP at 5 percent while nominal GDP at 7.5 percent.
The government later estimated India's GDP growth during fiscal 2019-20 at 5 percent as compared to 6.8 percent in the year-ago period.
Global rating agency Moody's Investors Service has lowered India’s gross domestic product growth projection for the fiscal year 2019-20 to 4.9 percent from 5.8 percent, saying that weak household consumption will curb economic growth and weigh on the credit quality.
India's GDP growth declined for the third straight quarter to an over six-year low of 4.5 percent for the second-quarter ended September 30, down from 5 percent recorded in the Q1FY20.
Budget 2019: In the 2019-20 budget, the government decided to increase surcharge from 15 percent to 25 percent on taxable income between Rs 2 crore and Rs 5 crore, and from 15 percent to 37 percent for income above Rs 5 crore.
Now: Sitharaman later announced the rollback of the controversial tax surcharge on the Foreign Portfolio Investment (FPIs). The decision taken in the budget to levy enhanced surcharge had spooked the stock markets.
Corporate Tax Cut
India cut corporate tax rates in September in a surprise move designed to woo manufacturers, revive private investment and lift growth from a six-year low. The cut in the headline corporate tax rate to 22 percent from 30 percent was widely cheered by corporates as well as the stock market.
(With agency inputs)
First Published: IST