NEW DELHI: The Modi government will once again resort to off-budget financing to meet their fiscal deficit targets for FY19. With less than a week to go for the interim budget, top sources indicate that the government could very well be staring at a revenue shortfall of close to ’1.5 lakh crore rupees on account of shortfall in GST collections.
“We will meet the fiscal target of 3.3% for FY19 as promised but the GST collection shortfall is around 1.5 lakh crores. We have asked ministries to avoid excess spending”, said a source on conditions of anonymity.
Sources indicate that North block has asked various central ministries to cut excess spending in light of the revenue position being weak. “Fertiliser and Food ministries had together need close to 50,000-60,000 cr since they had overshot their budgeted subsidy bills, but is unlikely paid this fiscal”, another government official told ET Now.
Off-budget financing or non-budgetary means are used by successive governments to meet the fiscal targets. India’s top auditor CAG had also flagged the increased used of off-budget financing in its report tabled in the parliament during the winter session.
“The budget math is always a lot of smoke and mirrors and various governments have used various means to prima facie meet the targets. This year particularly because of GST and given the reductions in rates and also because divestment collections have been weak, we will have a revenue shortfall”, said Mythili Bhusnurmath, ET Now’s Consulting Editor.
Global Rating agency Moody’s also said that in the absence of new revenue-boosting measures, the policies like income support to farmers, households and small enterprises will collectively make it harder for the government to achieve its fiscal consolidation objectives.
Sources also have indicated that the discussions are on at the highest level on fiscal targets for next year as well. “The central bank has indicated that further rate cuts will depend on fiscally prudent budget and the government wants to reach out to farmers, middle-income groups and unemployed and hence to find these schemes, we may have to retain fiscal targets for next year also”, the source said.
Source- Times Now.