A Bridge Too Far

The government’s fiscal math is off-track. It will have to do some accounting jugglery to stick to the fiscal deficit target.

- Dipak Mondal

IN EARLY JULY, Piyush Goyal, then in charge of the finance ministry, exuded confidence that Goods and Services Tax, or GST, collections for the year would cross 13 lakh crore, giving the government scope to rationalise tax rates. His hope is turning out to be as far from reality as it could be.

Monthly GST collections have to be nearly Ì€ 1,08,000 crore for Goyal’s goal to be met. They have been less than 1,00,000 crore for all months this year, except September, when they were 1,00,710 crore. Even the government’s Budget targets require average monthly collections to top 1 lakh crore. With just a few months to go for the financial year to end, the government is, in all likelihood, looking at a big hole in its finances.

This begs a question — was this fear over revenues shortfall also the trigger for its alleged demand for transfer of 3.6 lakh crore from the Reserve Bank of India’s, or RBI’s, reserves? Though the government put up a brave face and Secretary, Department of Economic Affairs, tweeted that the “government’s fiscal math is completely on track and there is no proposal to ask the RBI to transfer () 3.6 or 1 lakh crore, as speculated,” numbers available till the end of November tell a different story. Experts also ask that if everything is hunky dory with government finances, why is the secretary talking about fixing an “appropriate economic capital framework of RBI”? This refers to a process to set up a panel that will decide how much reserves the RBI will get to keep.

BT asked the Principal Economic Advisor to the government, Sanjeev Sanyal, for his views on the fiscal situation, but he declined comment saying he did not have the details offhand. Hasmukh Adhia, who was about to retire as revenue secretary in a day or two, refused to comment.

REVENUE GAP: TOO BIG TO MISS