Budget 2020: Three things that may rescue government’s budget maths from yawning fiscal gap this year

By: |
Updated: January 28, 2020 11:06:03 AM

Union Budget 2020 India: Reserve Bank of India is likely to transfer an additional sum of Rs 58,000 crore to the government from its surplus, compared to the preset limit of Rs 98,000 crore in the Budget 2019-20.

Budget 2020, Union Budget 2020 India, Budget 2020 India, Budget 2020-21, fiscal deficit, corporate tax, tax collection, agr dues, telcos, nirmala sitharamanBudget 2020 India: Government is likely to miss its fiscal deficit target of 3.3 per cent.

Budget 2020-21: While the government will likely breach the self-imposed fiscal deficit limit in the current financial year due to slower-than-estimated tax collection growth and expected miss on disinvestment targets, other factors at play are likely to come to the rescue, easing the fiscal burden. Narendra Modi’s Sabka Vishwas tax resolution scheme, telecommunication companies’ AGR dues payments, and dividend from RBI may rescue the government budget maths from a yawning fiscal gap. A rough estimate of these unexpected revenue sources suggests that it will provide the government a cushioning of Rs 2.6 lakh crore, The Indian Express reported. This sum is still Rs 50,000 crore less than the expected Rs 3.10 lakh crore shortfall in tax collection potentially pushing the fiscal deficit to 3.7 per cent of the GDP, the report said.

The biggest contribution towards Rs 2.60 lakh crore earnings for the government will come from the AGR dues payment by the telecom and non-telecom companies. If the Supreme Court doesn’t give any relief to the telecom companies, then Bharti Airtel will be expected to cough up Rs 35,000, while Vodafone Idea will be required to pay Rs 50,000 crore towards clearing their AGR dues. Reliance Communications which is currently under the insolvency hammer owes the government Rs 16,456 crore. Reliance Jio has already paid its AGR dues of Rs 195 crore on the deadline given by the government.

On the other hand, the Reserve Bank of India is likely to transfer an additional sum of Rs 58,000 crore to the government from its surplus, compared to the preset limit of Rs 98,000 crore in the Budget 2019-20. The government is also expecting about Rs 35,000 crore under the provisions of Sabka Vishwas (Legacy Dispute Resolution) Scheme.

Watch Video: What is Union Budget of India?


The suggestion by the Ministry of Finance to other ministries to bring about cost-cutting will also come in handy for the Finance Minister Nirmala Sitharaman. The Ministry of Finance had cut the expenditure allowance for the various ministries to 25 per cent of their budget estimate, 8 per cent lower than the usual 33 per cent.

The government had set a target of Rs 1.05 lakh crore from its divestment goals set in the budget 2019-20, which was more than 30 per cent of the target set in the last budget of 2018-19 but the central government could raise only Rs 18,094.59 crore so far in this fiscal year. The shortfall in tax collection post reduction in the corporate tax is likely to be in the range of Rs 70,000- 80,000 crore which is much less than the estimation made by the government at the time of abolishment.

Do you know What is Finance Bill, Short Term Capital Gains Tax, Fiscal Policy in India, Section 80C of Income Tax Act 1961, Expenditure Budget? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Next Stories
1Budget 2020: Making India less taxing; Here why It is time now to rationalise income tax rates
2Budget 2020: India needs to push for investments to kickstart growth
3Budget 2020: Will taxable income thresholds be raised?