A likely slippage in GST collections in the current fiscal, coupled with an expected bad show on non-tax revenues, has sent the Centre scurrying to raise resources from other non-traditional avenues such as RBI’s reserves, say economy watchers.

Being a pre-election year, the Centre is facing another hurdle. It will not be able to compromise on both revenue and capital expenditure budgeted for the current fiscal, they said. Expenditure will be sticky and scope to reduce it will be minimal.

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Pressure on the fisc is going to come more from the revenue side than the expenditure side especially with the disinvestment track record being far from satisfactory this fiscal. Till date, the disinvestment receipt mop-up is less than ₹16,000 crore as against target of ₹80,000 crore.

Moreover, the dividend flows from state-owned banks have dwindled and most central public sector enterprises too are not doing heavy lifting in terms of dividend payouts. With the economy expected to grow slower in the second half as against the first, the pressure on the fisc is only going to increase, experts pointed out.

No pressure now

Madan Sabnavis, Chief Economist, CARE Ratings, said there was no pressure on the fisc right now, but in the next four months some pressure points are visible which is the reason why the Centre is looking at contingency plans.

The government is cognisant of these pressure points on the fisc and hence preparing to tackle it, he said. “The government still has the option of running down on the cash reserves like last year, which helped control the fiscal deficit without any additional borrowing,” he added. Till the first half of this fiscal, the fiscal deficit picture has been in line with the trends of the previous years and reaching over 90 per cent of the budgeted level is not something to worry about as this is usually the case.

Devendra Kumar Pant, Chief Economist and Head-Public Finance, India Ratings, said the pressure on the fisc is largely coming from the revenue side. “The direct tax collections so far are at par with the growth assumed in the Budget. The main pressure point is coming from GST. Average monthly GST growth is currently lower than the budgeted growth,” Pant said.

With Air India’s strategic disinvestment not happening, there is a chance that the Centre will fall short of the overall target.

Expenditure picture

On the expenditure side, Ayushmann Bharat and the promised higher Minimum Support Price (MSP) payouts cannot be avoided in the coming months.

Pant said there is long gap between now and May (when the General Elections are likely to take place) and the fiscal picture could change. “We really don’t know how much the actual outgo for Ayushmann Bharat and MSP will be,” he said.