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Last updated: 01 Oct, 2019  

Rupee.9.Thmb.jpg Time to focus on revenue generation

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Bikky Khosla | 01 Oct, 2019

Fiscal deficit of the country touched Rs 5.54 lakh crore at the end of August, which is 78.7 percent of the Budget Estimate for 2019-20. These official figures have come amid concerns raised by several quarters over a possible fiscal slippage in the background of the Rs 1,45,000 crore stimulus by the Centre. Some rating agencies have already warned about this, while our Finance Minister has said that there are no plans to revise the fiscal deficit target.

Corporate taxes account for around one-third of our total tax collections, and therefore, there is no doubt that slashing of corporate tax from 30 percent to 22 percent for domestic companies will adversely impact the government's fiscal math. But at the same time it is difficult to question the timing of the big-bang fiscal stimulus that has come at a time when corporate profits as a percentage of GDP are at a decadal low. However, the Centre must now focus extensively on the "revenue" generation side.

Meanwhile, the Finance Minister recently said that the government's capital expenditure was on track and asked the ministries and the PSUs to clear all non-litigation dues at the earliest to keep the investment and consumption cycles active. In another development, the Centre has stuck to the borrowing calendar as set in the Budget, as it plans to raise Rs 2.68 lakh crore in the second half of financial year 2020. Amid such moves, some experts view that the Centre may seek an interim dividend from the RBI to meet its fiscal deficit target.

Asset monetisation could be a better solution, some others point out. According to them, it is the right time to monetise assets such as cash-generating infrastructure assets, inefficient companies, and land banks -- government-owned residential properties, land and buildings, etc. This issue has been debated upon for long, and now is the time to implement a clear roadmap in this regard. A well though-out strategy in this direction will definitely help generate revenues at this crucial juncture.

I invite your opinions.

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