The Revenue Conundrum

Warning signs of tighter fiscal control emerged with the government trimming borrowings by Rs  70,000 crore for the rest of the year. Tepid revenue collections may ruin the party notwithstanding adhering to the 3.3 per cent fiscal deficit target.

Until August this year, the government's revenue collection (Rs 4.6 lakh crore, 13.34% jump over last year) was on track. The two spoilsports could be: lower-than-expected GST collection and disinvestment proceeds.

GST collection from April-August 2018 was Rs 2.37 lakh crore, only 31% of the full-year estimate of Rs 7.43 lakh crore, and, the government has only Rs 9,500 crore against the divestment target of Rs 80,000 crore.

With no signs of a sudden spurt in monthly GST collection (which still hovers around Rs 95,000 crore against the required Rs 1.04 lakh crore), and no big disinvestments in sight, the government would be pinning its hope on net direct tax collection, which has so far shown a strong 14 per cent increase against last year's collection.