Informist, Thursday, Aug 17, 2023

–Fin min source: RBI dividend may mitigate some revenue shortfall FY24

–Fin min source: FY24 total tax mop-up to be very close to Budget aim

–Fin min source: See FY24 real GDP growth in the region of 6% 
–Fin min source: FY24 subsidy bill unlikely to be more than Budgeted

By Priyasmita Dutta and Sagar Sen

NEW DELHI – The government is unlikely to meet its Budget target to mop up 510 bln rupees through divestment of its stake in some public sector units in 2023-24 (Apr-Mar), a senior finance ministry official said today.

"Disinvestment will fall below target but the larger-than-expected dividend from the Reserve Bank of India will mitigate that (revenue shortfall)," the official told Informist.

The central bank approved a dividend of 874.16 bln rupees to the government for the financial year 2022-23 (Apr-Mar). The amount was sharply higher than the central bank's surplus transfer of 303.07 bln rupees for the previous financial ended March 2022.

The government has so far raised just 56 bln rupees from selling its stake in public sector companies in this fiscal.

It is broadly going to meet the overall tax collection target for the current financial year started April, the official said. However, the official also said there may be a small shortfall in individual components of tax.

The Budget for 2023-24 has projected total tax collections in the current year at 33.61 trln rupees, up 10.4% from a year ago.

The Centre's tax collections in the first quarter of the current fiscal were 3.3% higher on year at 6.72 trln rupees, primarily due to a rise in central goods and services tax mop-up and income tax 

collections, latest data shows. The Controller General of Accounts will release data till July on Aug 31.

The official said the government is not overly worried about the lag in corporate tax collection in the first quarter. In Apr-Jun, corporate tax collections contracted 13.9% on year to 1.39 trln rupees. According to the latest data released by revenue department, direct tax collection, net of refunds, during Apr 1-Aug 10 was at 5.84 trln rupees, up 17.3% from a year ago.

The government does not expect nominal GDP growth of 10.5%, projected in the Budget for 2023-24, to be adversely impacted. "We expect the real GDP growth to be in the region of 6%," the official said.

Earlier this month, the Reserve Bank of India kept its projection for India's GDP growth for 2023-24 unchanged at 6.5% on account of sustained strong domestic demand conditions.

The official said there are no major risks emanating from the higher subsidy expenditure in the current financial year and the overall subsidy bill is likely to be contained within the Budget estimate. "I genuinely don't expect any major change from our Budget, fertiliser subsidy…food subsidy." 

As per the latest data from the Controller General of Accounts, the government's expenditure on major subsidies rose 28% on year to 870 bln rupees in Apr-Jun. Expenditure on major subsidies in the first quarter of the current fiscal accounted for 23% of the Budget target.

The Centre's food subsidy bill contracted 2.6% on year to 415 bln rupees in Apr-Jun, while its fertiliser subsidy jumped 78.0% to 451 bln rupees. Food and fertiliser subsidy bills for the current fiscal are pegged at 1.97 trln rupees and 1.75 trln rupees, respectively. 

The government pegged total subsidy bill for 2023-24 at 4.03 trln rupees in the Budget, down 28.3% from the revised estimate of 5.621 trln rupees.  End

Edited by Vandana Hingorani

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