GST revenue run-rate has broadly stabilised around Rs 90,000 crores per month in the current fiscal year.
The downturn in three major sectors – investments, consumption, and demand – behind India’s ongoing economic slowdown is unlikely to show any abatement in the coming year 2020. Due to continued blockages in financial channels, government’s limited expenditure capacity, and muted demand visibility, the investment is unlikely to pick up soon, says Kotak Economic Research report. The forecasts say that even the fiscal space is likely to be limited, while the downturns in the financial sector may continue.
It has been suggested that the government should retain its focus on rural and urban infrastructure to improve demand, as well as rural schemes such as NREGA, PMGSY, and PMAY-rural even as lower allocations may be required for some of the relatively smaller schemes.
While the economy is hit by the slowdown in almost all quarters, the revenue collection has also started to raise alarms by now. GST revenue run-rate has broadly stabilised around Rs 90,000 crores per month in the current fiscal year and it is yet not known why revenues have been consistently lower than expected. The personal income tax collections could also be lower by around Rs 50,000 crores if the government were to implement most of the DTC panel recommendations, said the Kotak Economic Research report.
Considering the fiscal stimulus that the government had announced in the recent past to boost the ailing economy, the absence of any significant pick up in tax revenues (especially GST) may make it unlikely for the government to deliver any large fiscal stimulus.
Despite announcing measures to boost the economy, the government has yet not revised the fiscal deficit target. However, the report says that there can be a revenue shortfall of Rs 2.2 lakh crore in the current year. The fiscal deficit of FY20 has been estimated at 3.8 per cent by the firm.
Meanwhile, the government held a press conference today to show the extent of implementation of the steps announced by the government so far to boost the economy.
— PIB India (@PIB_India) December 13, 2019