Wide gap between tax receipts and Budget target sparks concern

Analysts see up to %1 lakh crore shortfall in gross tax revenues

- KULDEEP SINGH

THE UNION GOVERNMENT would need its gross tax revenues (GTR) to grow at a daunting rate of 21.4% inthe second half of the current financial year (H2) to meet the Budget Estimate (BE) of %42.7 lakh crore for the year as a whole.

Given that nominal GDP growth might hover around 8-9% in the year, this would require tax buoyancy of 2-2.5, which is hardly seen in recent years.A significant shortfall in GTR against the BE seems likely, but the Centre might still manage to meet its fiscal deficit target of 4.4% of the gross domestic product (GDP) for the year, down from 4.8% in 2024-25, thanks to robust dividend payout of 2.56 lakh crore from the Reserve Bank of India (RBI), and the savings expected on some expenditure heads. Yet, the fiscal chal-

lenges are manifold: higher demand for subsidies from the ministries/agencies concerned, the need to keep pace with the budgeted capex (it grew 40% on a low base on H1) and a lower-than-budgeted nominal GDP in the benign inflation scenario.

In FY26, the GTR should be 12.5% higher compared to the provisional estimates of FY25 to meet the Budget target.

However, the Centre’s first half (H1) collection was €18.65 lakh crore, a rise of just 2.8% in comparison to the corresponding period of last year. In H1 of FY25, GTR grew 12% on year. To meet FY26 BE, the GTRin H2 should be %24.04 lakh crore in absolute terms.