Government today said revenue collection will fall short by Rs 50,000 crore but expressed confidence that economic growth will exceed 7.5 per cent, with fiscal deficit remaining within the budgeted target.
"Our macro-fundamentals remain strong. We are now better placed to handle unforeseen external shocks and to put India firmly on the path of economic recovery and inclusive prosperity," Finance Secretary Ratan Watal said at a press conference along with other secretaries and the Chief Economic Advisor.
One of the concerns is revenue collection, which according to Revenue Secretary Hasmukh Adhia will fall short of the budgetary target by 5-7 per cent, mainly because of subdued growth in direct taxes.
The total tax revenues are likely to be around Rs 14 lakh crore in the current fiscal, as against the budget estimate of Rs 14.5 lakh crore.
As regards growth, Economic Affairs Secretary Shaktikanta Das said there are indications that it will exceed 7.5 per cent in the current financial year.
"Despite the global slowdown and declining export demand, India has emerged as the fastest growing major economy in the world," said an official statement, adding that the government will continue to implement its reform agenda to realise potential growth rate of 8 per cent plus over time.
On the price situation, it said the "outlook for inflation is also good, as indicated by the RBI in its latest monetary policy review. Despite the uncertain monsoon, government food management, including use of the price stabilisation fund to augment domestic supplies with imports, will ensure that food inflation is contained".
The government and the Reserve Bank, Watal said, will work together to "consolidate the gains achieved in inflation control, through the inflation targeting framework and the associated institutional arrangements".
The retail inflation, based on the Consumer Price Index (CPI) is within the target zone, while Wholesale Price Index based inflation has been negative for 10 months in a row with core inflation showing signs of moderation, he said.
The twin deficits - fiscal and current account - have been reduced, he said, adding "the government is committed to achieving this year’s fiscal deficit target as well as the fiscal glide path laid out in the budget".
Observing that the revenue collection target for the current fiscal was 16.5 per cent as against 9.9 per cent in the previous fiscal, Adhia said, "in a way the target looks to be ambitious, but the revenue position so far has been very very satisfactory".
Direct tax collection during April-September registered an increase of 12 per cent, he said.
As regards indirect taxes, the growth during April-August worked out to be 36.5 per cent. It would be 12.2 per cent after excluding the additional revenue measures by the government during the year.
The growth of 36.5 per cent in indirect taxes is "quite satisfactory" he said, adding there is "likely to be some shortfall in direct taxes when we end up the year, but some part of it will be made good by indirect taxes because of the additional resource mobilisation measures.
"I am very hopeful that if there in no other externalities which comes in, we should be able to achieve our target. Only the shortfall may be not more than 7 per cent...May be around 5 per cent shortfall may be there," he said.
On the positive side, Adhia said that growth in indirect taxes was a reflection on increasing demand and economic activity.
"Goods are being sold, goods are being consumed, they are being imported, people are paying excise on it, the service tax is also showing some kind of buoyancy. So all this is looking good," he added.