Divestments, rising GST mop-up to lower fiscal deficit pains

The success in divestments and encouraging goods and services tax collections will help government reduce pressure on the fiscal math, says a report.

disinvestment, GST, note ban, demonetisation, note bandi, goods and service tax, fiscal growth
On GST, it said even though there can be an adverse impact of Rs 11,000 crore on the Central finances due to a commitment of a 14 per cent revenue sharing with the state from central GST to meet their projected shortfall, the final results will not be so bad. (Reuters)

The success in divestments and encouraging goods and services tax collections will help government reduce pressure on the fiscal math, says a report. “Disinvestment drive and GST rollout will reduce pressure on fiscal arithmetic,” domestic rating agency India Ratings said in a report today. It can be noted that government has reiterated its commitment to narrow down the fiscal deficit to 3.2 per cent for fiscal 2018. Front-loading of expenditure, where government has exhausted 96 per cent of the deficit by August, and also a slowdown in growth which led it to even mull a stimulus, had put question marks over whether it government will be able to meet the fiscal deficit target or not. The report said successful subscription of Bharat 22 exchange traded fund launched last week has helped government move closer to its FY18 divestment target of Rs 72,500 crore and it has raised Rs 52,300 crore by the end of November. It said government can exceed its capital receipts target through divestment alone in the remaining four months, depending on ONGC’s acquisition of 51.11 per cent government stake in Hindustan Petroleum Corporation. This will bring in at least an additional Rs 32,000 crore to divestment kitty. Without elaborating, the report said the divestment strategy has a potential to generate Rs 1 trillion and also provide buffer against lower surplus transferred by the Reserve Bank and the likely shortfall from the telecom sector.

On GST, it said even though there can be an adverse impact of Rs 11,000 crore on the Central finances due to a commitment of a 14 per cent revenue sharing with the state from central GST to meet their projected shortfall, the final results will not be so bad. “However, GST collection is encouraging and likely to further improve going forward with higher return filing compliance,” it said. The agency said government front-loaded capital expenditure and the same is now slowing down. It said the proposed bank recapitalisation and highway building work under the Bharatmala scheme will not entail any budgetary allocation this year.

direct tax, dtcr, taxes, income tax, central taxes, economy
Govt kicks off direct tax code revision
West Asia tension, IEA, oil prices, global crude oil prices, interest rates, inflation, OPEC+, output cuts, oil production, energy crisis
How will West Asia tension impact India? IEA warns inflation could inch higher as oil prices rise
india, china, import, export, economy, china imports
India widens its share in China’s imports in FY24
FDI, regulatory landscape, due diligence, FDI norms, global economic conditions, FDI inflows, demographic dividend, infrastructure development
Foreign Direct Investment in India: Navigating the legal and regulatory landscape

Get live Share Market updates, Stock Market Quotes, and the latest India News and business news on Financial Express. Download the Financial Express App for the latest finance news.

First published on: 27-11-2017 at 18:27 IST
Market Data
Market Data
Today’s Most Popular Stories ×