For the first time, the Central government is expected to beat its own revenue collection targets by a wide margin during the current financial year and may announce a record budget expansion for financial year (FY) 2023. India has worried about meeting its fiscal targets for the past several years but this year could be a positive surprise, experts say.

According to data collated by research firm CNI Global, the government's GST (goods and service tax) collections are likely to be higher by 233 percent, direct taxes will rise by 126 per cent and fiscal deficit (shortfall in a government's income compared with its spending) may fall by 66 per cent.

These numbers form the core of each year's financial Budget and a report by CNI Global says that Finance Minister Nirmala Sitharaman is likely to announce a record expansion of budget size to the tune of ₹40 lakh crore to ₹45 lakh crore (roughly $533 billion to $600 billion) during her presentation. CNI believes that 5G telecom spectrum auction will be conducted in the current fiscal (ending March 31) and could give a surprise revenue boost of around ₹1.5 lakh crore (nearly $20 billion) to the government.

Sitharaman will present the Budget on February 1 and like every year, most financial market analysts will look for percentage gains in tax collection revenues, GDP growth and fiscal deficit management. Tax collection targets were sagging for the past couple of years due to the pandemic and global scare on Covid. The government's budget expectations for 2021-2022 stood at ₹34,83,263 crore (roughly $464.4 billion). In this, it was expecting receipts of ₹19,76,424 crore (approximately $263.5 billion) from tax collections and the rest ₹15,06,812 crore (nearly $200.9 billion) from borrowings. But the actual half year collections itself have surprised positively.

Budget receipts

Data from CNI report shows that out of the total Budget receipts of ₹19.76 lakh crore (approximately $263.5 billion), the actual government receipts stood at ₹10.99 lakh crore (approximately $146.5 billion) or 56 per cent of the total projected receipts during the first half of the current fiscal. In this, actual tax collections stood at ₹9.2 lakh crore (nearly $122.66 billion) or 60 per cent of the government’s own projections. Therefore, CNI believes it would be a cake-walk for the government to beat its projections this year as second half of the current fiscal is likely to yield bumper tax collections.

The government had targeted an expenditure of ₹34.83 lakh crore (roughly $464 billion) and a fiscal deficit of ₹15.06 lakh crore (nearly $200 billion) during the current fiscal. But actual spending or the expenses of the government stood at ₹16.26 lakh crore (approximately $216 billion) or just 47 per cent of the estimated total spending for the first half of the current fiscal.

It leaves huge score for the government to spend on infrastructure and other ‘Make in India’ projects that could boost growth by several folds. The fiscal deficit at ₹5.26 lakh crore (approximately $70.13 billion) or just 35 per cent was well within the manageable limits and highly positive for the economy, said the CNI report. Further, the reports estimates GST collections to touch ₹14.7 lakh crore (nearly $187.6 billion) and direct tax collections to rise to ₹14 lakh crore (approximately $186.6 billion) in current fiscal. The chances of India's fiscal deficit falling below 6 per cent of the GDP are bright in FY2021-22, said the CNI report.


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