The revised 3.8 per cent fiscal deficit for FY20 looks ambitious as it is based on projected 18 per cent rise in tax collections against a paltry 5.1 per cent higher realisaition so far, and around Rs 65,000 crore mop-up through disinvestment in the last two months of the current fiscal, SBI Research said in a report on Sunday.
The revised deficit target is propped on the belief that the divestment will fetch Rs 65,000 crore through the next two months. As against the Rs 1.05 lakh crore budgeted target, the divestment proceeds has been one of the lowest in recent years at a paltry Rs 17,800 crore.
The Union Budget for 2020-21 used the permissible 50 bps deviation under Section 4(3) of the FRBM Act to widen the fiscal deficit at 3.8 per cent of the GDP, revealing a revenue shortfall of around Rs 2.60 lakh crore, of which states are losing Rs 1.09 lakh crore.
“After adjusting for the expenditure rationalisation of around Rs 88,000 crore, the revised fiscal deficit for FY20 comes to around Rs 63,086 crore over the budgeted numbers. The saving grace is the jump in non-tax revenue of around Rs 32,335 crore or 20 bps of fiscal deficit, possibly reflecting the AGR payments/interim dividend from RBI in lieu of telecom.