Tax collections raise doubts on lower borrowing plan

The September collection of revenue from the goods and services tax, or GST, totaled Rs 94,440 crore ($12.9 billion), which was short of Rs 1 lakh crore monthly target.

India’s sovereign bond market continues to be battered and nothing seems to be helping it. The  government’s decision to cut its borrowing plan had raised some hope in the markets but it seems to be fleeing already as, for the fifth straight month, tax collections have failed the target. 
 
The September collection of revenue from the goods and services tax, or GST, totaled Rs 94,440 crore ($12.9 billion), which was short of Rs 1 lakh crore monthly target. This gap, believe experts, may prove to be a setback to the government’s plan to cut its borrowing  by Rs 70,000 crore this year.  
 
Concerns are being raised as to how the  government will meet this cut in borrowing. The shortfall in GST numbers is a matter of concern and the market has adopted a wait and watch policyWe are seeing some hiccups in the GST numbers. We will be on wait ­and watch attitude on the unfolding fiscal scenario.  
 
ET in its report quoted Kotak Mahindra Bank sources saying that on a cash accounting basis, the collections are likely at around Rs 90,000 crore per month during April­September, implying a higher required monthly run­rate of 1,19,000 lakh crore for the October­March period.  
 
Meanwhile economists opine that  without expenditure cuts, it will be difficult for the government to stick to the budgeted target. They are forecasting a wider fiscal deficit of 3.5 per cent against the government’s target of 3.3 per cent. 
 
With the general elections in 2019, it does seem an impossible task for the government.
 
Source: Media reports

Add new comment