The below-par goods and services tax (GST) revenue collection reported by the government for the first six months of the current fiscal may put its carefully calculated fiscal math at risk. The total gross GST revenue collected in September was Rs 94,442 crore and the total during the April to September period was Rs 577,970 crore. When compared with the target of Rs one lakh crore in GST revenue each month, it becomes clear that the shortfall in the first six months in gross revenue is over Rs 22,000 crore. Of course, the government expects some of the shortfall to be made up through higher purchases during the festive season which commences this month. And it has also reiterated that the fiscal deficit target and other milestones for this fiscal (FY19) would be adhered to. But analysts continue to be concerned over the country’s fiscal health.
Analysts at brokerage firm IIFL said in a note that GST collections have been weaker than budgeted in the first half of this fiscal, and excluding cess they averaged Rs 88,300 crore per month against the required rate of Rs 100,000 crore.
“While both central and state GST collections are below par, the shortfall is significantly higher for the union government. Also, given the current market conditions, it would be challenging to meet the target of non-debt capital receipts of Rs 92,200 crore. Reducing revenue expenditure would be difficult as fuel subsidy burden is expected to be higher than the budget estimates and curbs on capital expenditure would have a modest impact on the overall spending, which accounts for only about 12% of overall expenditure. Although the government has cut its borrowing plan by Rs 70,000 crore recently, it may need to revise this up sharply if the deficit is higher than estimates,” IIFL analysts said.
Further, analysts believe that higher government borrowings may be needed, perhaps closer to the end of the current fiscal year.
But while briefing the media after the latest meeting of the GST Council last week, finance minister Arun Jaitley spoke of the positive trends seen in GST collections this fiscal and also reiterated the government’s commitment to remain committed towards the fiscal target. He did not speak of the annual gross GST revenue target for the current fiscal.
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