Union Budget Prediction 2019-20

Government sticks to fiscal deficit target in FY19 through sharp cutback in expenditure Gross tax revenues for FY19 fell way short of expectations at ` 20.78 lakh cr. as compared of revised target of ` 22.48 lakh cr. 
As a result net tax revenue came in short at ` 13.17 lakh cr. as compared to revised estimates of ` 14.84 lakh cr. There was shortfall in both direct and indirect tax collections which was a fallout of the slowdown in the economy Shortfall in direct tax collection was largely on account of personal income tax collection which fell well short of the revised estimates (` 5.29 lakh cr.) at ` 4.62 lakh cr. Corporate tax collections though were mostly in line with the revised estimates. GST collections too fell well short of revised estimates (` 6.44 lakh cr.) at ` 5.84 lakh cr. Non tax revenues came in marginally ahead of revised estimates at ` 2.46 lakh cr. Non Debt Capital Receipts were also marginally ahead of revised estimates with Recovery of Loans at ` 17,840 cr. while Disinvestment proceeds stood at ` 85,045 cr. Shortfall in revenues was balanced by a cut in Expenditure to ` 23.11 lakh cr. (94.1% of revised estimates). 
While capital expenditure was cut by 4.3% to ` 3.03 Lakh cr. revenue expenditure was cut sharply by 6.2% to ` 20.1 lakh cr. Expenditure on major subsidies stood at ` 1.97 lakh cr. as compared to revised estimates of ` 2.66 lakh cr. which indicates that the Government may have resorted to off balance sheet funding of subsidies. FY20 Fiscal deficit and borrowing numbers worrying markets given shortfall in tax collection numbers While the Government has managed to meet fiscal deficit targets for FY19, bond markets remained worried about issuances in FY2020. Fiscal deficit estimate at 3.4% of GDP was well ahead of glide path of 3.1% for FY2020. 
While net borrowing figures are manageable at `4.73 lakh cr, gross market borrowings are already significant at `7.61 lakh cr in FY2020 against `5.71 lakh cr in FY2019. 
Given a shortfall in revenues in FY19 and slowdown in the economy revenue targets set for FY20 in the interim budget may not be achievable.
 Nominal GDP growth to may need to be scaled down from earlier estimates of 11.8% yoy as both the real GDP growth and inflation are likely to be subdued in the first half of FY20.  

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