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.
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:
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.
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.
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.
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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