The Resource Mobilisation Challenge

Tapping into healthier revenue generation avenues will create the fiscal space for the government to ramp up infrastructure spend and development

- ELIAS GEORGE

WITH THE UNION BUDGET SET TO be announced shortly, the Finance Minister is faced with the challenge of determining additional avenues for mobilization of financial resources to support the government’s ambitious infrastructure development and growth targets. Over the past few years, the government has explored various sources of generating revenue to supplement the limited fiscal resources available. Apart from the taxation route, an assessment of non-tax revenues of the government shows a significant rise from 2.7 per cent of GDP in 2014-15 to 5.1 per cent of GDP in 2020-21.

Non-tax revenue generation methods by unlocking the investment value of public sector assets to generate capital has been institutionalised through the National Monetisation Pipeline. This programme aims to aggregate the monetisation potential of ₹6 lakh crore through core assets of the central government over FY2022-25. As identified by the government, the road, railways, power, oil & gas and telecom sectors appear to be amenable to generating large revenue through asset monetisation. The initial success of this drive has been witnessed with NHAI raising ₹17,000 crores through the toll-operate-transfer mode over the past two years. However, these are still early days.

Having surpassed two waves of the pandemic, and in the midst of the third wave, the case for government intervention to spearhead economic recovery continues to remain very strong. Since around 15 per cent of India’s GDP comes from government expenditure, providing state governments with funds to spend is critical for recovery, as state expenditure has a high impact on sustained economic activity. Both the Centre and the states need to explore additional means to bridge revenue shortfall, in line with their current strategies.