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We Just Missed Revenue Estimates by 63,000 Crores. And The Biggest Culprit: Service Tax

India is brilliant, they’re going to tell you in the news tomorrow. But what really has happened in the last year is absolute carnage, in terms of both revenues and expenses of the Central Government.

Revenues Down 63,000 Crores

If you look at revenues, most of the money comes from taxes, some from non-tax revenue.


We missed budget estimates of Corporation Tax (meaning, what companies pay as taxes) by Rs. 25,000 cr.

The Indirect tax hit was huge:

  • Customs duty lower by 13,000 cr. – probably because of curbs on gold, one thinks.
  • Excise duties down by 21,000 cr. and this is what tells you Manufacturing is in the doldrums.
  • Service Tax, the stuff that is supposedly “buoyant” in the economy (the service sector) saw nearly 48,000 cr. lower revenue!

The big surprise is Service Tax – how could we have such a big miss? The collections are low, and tremendously low, in a year where we should have seen the service sector boom (elections, huge market surges, potentially increased sales and so on)

Only “Non Tax Revenues” were okay, and that too because of large dividends by the PSUs and some auctions.

In all, we were 63,000 cr. lower than estimates.

Why are we saying all of this? Because even Revenues going forward (in the budget for next year) are estimates. If we missed them by such a massive amount, we will be in serious trouble.

To Compensate, Expenses were Cut Drastically

We supposedly wanted to compensate for revenue misses and also a lower deficit number. So expenses were even further lower, by over 100,000 cr.



  • Had lower interest payments by 15,000 cr. (from a falling yield curve)
  • Saw subsidies go UP by 6034 cr. (What happened to fuel savings?)
  • Had to cut Defense Capex by 12,600 cr.
  • And then the big thing: Plan Expenditure was down by over 107,000 crores.

Plan Expenditure is the outlay by the Center (and also by the states) to meet plan targets, with programs etc. We had to cut that down in order to meet the lower revenue numbers and make the deficit targets.

India’s Doing Just Fine?

It’s important to have a positive outlook, but let’s stop bullshitting ourselves that everything is just fine. We just saw a huge revenue miss, had to cut expenditure by more than a trillion rupees, and we just about scraped through this year.

The next year’s budget is, in that context, mega challenging. We’ll come to that, in the usual Capital Mind way of using public data to frame our insights.


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  • Hi, The figures in the first table are not adding up. The “change” column totals to much more than 63K. Or am I missing something?

  • west_canal says:

    This year also their budgeted indirect tax collection growth seems wildly optimistic. To meet the fiscal deficit number they will be cutting plan expenditure.

  • Vineet says:

    Thanks for the data, the coverage on news channels is nauseating. It’d be interesting to see how this govt handles $100 oil prices (something that will happen eventually). The stock markets will soar none the less I guess.

  • Praveen Vishnu Shamain says:

    We have to remember that Excise duty difference would have been much much higher if Govt. had not increased the same on Petrol/Diesel. What will be interesting to watch will be Govt. action on the same if crude again goes to 100 in FY 15-16.

  • SATHEESH says:

    when our receipts are 11+ trillion how can we have near 17 trillion expenditure.The 6 trillion is printed or ??Please looking for ur reply

  • esotericBlue says:

    appreciate you pointing the obvious, but one that has been glossed over. the deficit.
    – what ever happens to all the accumulated deficits? ( does it lead to more fiat money printing and consequently up-tick in inflation? down-tick in purchasing power of Rupee (INR)? weaker exchange rates of INR? )
    – how many times since independence have we eked out a surplus? just curious.

  • rama karupaiah says:

    Why did the media do such a fantastic job in selling this budget? After all they are dead set against this government. Even people like Swaminathan Aiyar liked it.
    Facts are facts – govt. finances are in a bad shape. However the govt. could have done something for the middle class in the tax slab. This would have made political sense; the govt. seems to have shot itself in the foot by increasing service tax, excise duty, petrol prices all at once. What is this? Political suicide??

  • Shash says:

    No. Its achhe din.

  • Mohit Satyanand says:

    The question is whether Mr. Jaitley actually expects the amount of tax bouyancy he has budgeted, or it is just an exercise in cynicism, since he always has the options of – borrowing more, spending less, or liquidating more assets.
    He may shy away from borrowing more, while his ability to spend less may be limited by political considerations. The liquidation of PSU shares and other assets will depend on market conditions.
    The spin ball will be a recovery in oil prices, though that looks unlikely, in the current global mood.
    All in all, the budget is too contingent on unknown factors, and has taken up risk levels in our economy.

  • Pritam says:

    Just cut down central and state sector employees by half in all except teaching and medical categories.
    Automate most govt procedures related to property transactions.
    There will be enough savings.