The Budget’s revenue assumptions including the non-tax collections from sale of telecom spectrum and government stakes in companies are realistic, economic affairs secretary Shaktikanta Das told FE. “The budget projects gross tax receipts to rise 11.7% next fiscal as compared to 17% in the current fiscal. Similarly, the estimates on spectrum of about Rs 99,000 crore and Rs 56,500 crore by way of disinvestment including strategic sales are very much realistic and achievable,” he said.
In fact, he said, there could be an upside to tax receipts as the economy was expected to grow 11% in nominal terms next year. Analysts have cited that the estimate of spectrum revenue for FY17 was based on the assumption of R2.4 lakh crore as spectrum proceeds, which looks very optimistic. According to Das, a sum of Rs 20,000 crore is expected as spectrum licence fee and Rs 55,000-60,000 crore as spectrum proceeds from past and FY17 auctions. Some more revenue can potentially be generated from this resource, given the arrears that need to be recovered.
The official said although the pressure to up spending further was intense, the government finally chose to adhere to the deficit target of 3.5% of GDP in FY17, factoring in the issue of its own credibility and the debt sustainability. “So, eventually it’s fiscal prudence which tilted the balance in favour of sticking to the deficit targets,” said Das, who has been part of seven central Budget teams as a senior finance ministry official.
On the expenditure side, the allocations were made taking into account the capacity of the departments to spend the money effectively while also paying heed to the quality of expenditure. The Budget projects expenditure to grow 10.8% to Rs 19.78 lakh crore in next fiscal. “So, whatever money can be effectively spent by the various departments like agriculture, irrigation, rural sector and social sectors have been made,” Das said.
On market disappointment that the government did not provide more capital for NPA-ridden public sector banks in sync with the Reserve Bank of India’s plan of clean and fully provisioned bank balance sheets by April 2017, Das said it could provide another Rs 5,000-7,000 crore from savings during the year if needed. The Centre has allocated Rs 25,000 crore for banks in FY17. On provisions towards the Seventh Pay Commission, Das said some interim provisions have been made, but refused to quantify the same as a committee of secretaries was still going through the recommendations of the commission.
On the rationale for the Budget announcement for setting up a panel to review the Fiscal Responsibility and Budget Management Act, 2003, Das said there were suggestions that fiscal deficit should be fixed in a band as a target, not a fixed number. “In a good year, we can look at something lower than 3%, in a difficult year, we can look at a little higher than 3% within a range,” he said. Das credited the Act for the improvement in the fiscal health of both Centre and states since it came into being 10 years ago.