The Central Government on Saturday declared in parliament the Actual receipts for nine months ended December 31, 2020, vis a vis budget estimates for the current financial year 2020-21.
Total Revenue receipts were only Rs.11,21,678 crore till December 31of 2020, as against estimated Rs. 22,45,893 crore for the full year. Of these total receipts of Rs. 11,21,678 crore collected till 31-12-2020, Tax receipts were Rs.962,399 crore, non tax receipts Rs.126,181 crore and Rs.33,098 crore were Capital receipts .
Actual Tax collection estimated for FY 2020-21 was Rs.16,35,909 crore. Of this huge amount estimated Corporate Income tax was Rs.681,000 crore, personal income tax Rs.638,000 crore, GST central share only Rs.690,500 crore, excise duty on petrolium products Rs. 267,000 crore Customs duty on imports & exports Rs.138,000 crore and Service tax Rs.1,020 crore.
The figures declared by central Government were stunning. In the last three years budget, estimated tax collection was achieved with around 90% to 93%. Now for the current Financial year 2020-21 up to November month, Corporate tax collection was only Rs.1.85 lakh crore against the full-year estimated amount of Rs.6.81 lakh crore. Even if we assume another Rs.1.85 lakh crore collected by March 2021. The actual figure will be hardly Rs.3.70 lakh crore.
Similarly in Personal Income tax collection field the tax collection till November was hardly Rs.2.35 crore so even if it doubled by March 2021, the total will be Rs.4.70 lakh crore only against estimated Rs.6.38 lakh crore. How to bridge the gap of Rs.4.79 lakh crore in total Income tax collection is a moot question to be asked?
Of course, we have a Miracle in Petrol & diesel prices. it is the panacea. Excise duty on petrol and diesel was Rs. 196,342 crores till 31-12-2020 for nine months, compared to Rs.132,899 crore collected during the same period in 2019. This was achieved as global prices were low, and India not reduced accordingly.
The diesel sales came down from 55.4 million tons for 9 months ended 31-12-2019 to 44.9 million tons for 9 months ended 31-12-2020. Same is the case with petrol sales also in the same period sales came down from 20.4 million tons to 17.4 million tons. With huge reduced sales of petrol and diesel also huge tax collection done by Central and State governments.
Total Expenditure estimated for 2020-21 was Rs.30,42,230 crore. It includes fresh borrowing of Rs.796,337 crore which was termed as Fiscal Deficit.
Of the Total expenditure estimate states and UTs receive Rs.13,90,666 crore. But due to Covid-19 pandemic all estimations on receipts and expenses went a sea change . On one side receipts reduced drastically and expenses on Military increased from Rs.477,000 crore to Rs.5,20,000 crore due to purchase of additional planes due to China Aggressive postures.
The borrowing (Fiscal deficit) was estimated to touch Rs.12,50,000 crore by March-end of 2021 as against earlier estimate of Rs.796,337 crore. The effects of these huge borrowing are not yet estimated by any analyst so far.
All states and Union Territories were estimated to get Rs.13,90,666 crore as grant and Devolution of Central Funds. But so far till December 31, 2020, for nine months only Rs.371,640 crores received. We can imagine the horrible impact of this low level of Funds transfer from Central Government for the first time. The same amount of funds were transferred to States & UTs a decade ago.
While presenting the budget for 2020-21 it was mentioned that Fiscal deficit (fresh borrowing) was estimated at Rs.796,337 crore of which around Rs.550,000 crore will be used for payment of interest on Bonds borrowed money.
So, if Fresh borrowing becomes Rs.12.50 lakh this year by issuing bonds, additional interest burden of around Rs.75,000 crore to be made as a provision for interest on borrowed funds. So next year interest burden will be around Rs.6.20 lakh crore. To meet this minimum Fresh Borrowing in the next budget will be Rs.10 lakh crore.
Budget in 2013-14
During Manmohan Singh Government, the last budget was in 2013-14 in which the total Expenditure was estimated at Rs.15,63,485 crore. With fresh borrowing of Rs.508,149 crore, Tax collection was estimated at Rs.11,33,832 crore. In the fresh borrowing of Rs.508,149 crore in 2013-14, the major share was a payment of interest on bonds for Rs.377,502 crore.
The then Planning Commission, currently Neeti Aayog, already declared that total Debt of Central Government was 50% of the GDP in 2019 which is an alarming situation. They advised reducing the total debt to 40% of GDP by 2025.
But whether India comes out of this huge debt burden?
In next year budget also all-state Governments will have a huge burden of interest on borrowed funds by bonds. So India is practically at the level of 2013- 14 financially thereby taking the country to 6-years back financially.
So far no package has given for Airlines, Tourism industry, and Free Ration to the poor to be given in all top 25 cities till March 2021.
The huge expenditure on the Health sector is also expected. Presently till now, Centre expenses on health care was Rs.69,000 crore this year.
Let us wait for good days. Fiscal Deficit to be brought to Rs.7.00 lakh crore only for the next three years.