FM Shuns Ambitious Targets For FY 19

FM Shuns Ambitious Targets For FY 19

Having set an ambitious target in 201718, the government seems to have turned realistic on garnering non-tax revenues for 201819. On the revenue side,a slippage in projected non-tax revenues collections was the major factor for the government exceeding by 0.3 percentage points the fiscal deficit target set under the fiscal consolidation road map for 201819.

The 13.5 per cent shortfall in nontax revenue collections (over the Budget Estimates) has occurred in FY18 despite the fact that the Reserve Bank of India (RBI) transferred an additional Rs100 billion to the government.In all, RBI has transferred surpluses of RS 406.59 billion (Rs 306.59 had been transferred earlier), which was, however, lower than the Rs 600 billion projected in the Budget Estimates (BE).

As a result, the government projected a modest rise ofa3.8 per cent (Rs 2.45 trillion) in non tax revenues for 2018-19 even on the lower base of RE of 201718. If the BE of 201718 is taken into account the revenues will be lower by 15.1 per cent for 201819.The government projected Rs 2.9 trillion to come from nontax revenues for the current financial year, but is now expected to get only Rs 2.3 trillion.

Had the government met its nontax revenue target, the fiscal deficit would have been contained at the targeted 3.2 per cent of GDP or even lower.The transfer of surplus from RBI, dividends from public sector banks and financial institutions would give the exchequer just Rs 548.2 billion in FY19, only Rs 21 billion higher than what it is likely to get in in the current financial year.

This means that the government does not expect much from struggling banks despitea Rs 800 billion recapitalisation programme.Public sector units are projected to give lower dividend to the government at Rs 524.9 billion next financial year against what was expected in FY18.

The Budget givesacombined figure for RBI, public sector banks and financial institutions dividend to the government.That was pegged at Rs 749 billion in BE but the government received only Rs 516.24 billion.The government had also asked public sector enterprises to pay more dividend to it, but they rather paid Rs 548 billion, lower than Rs 675.29 pegged in the 201718 Budget Estimate.Telecom spectrum sales did not deliver much either

Govt expects 58% jump in telecom revenue

The government expects revenues of Rs 486.61 billion from the telecom sector, which is reeling under financial stress, in 201819. This marks a 58 per cent increase over revenues of Rs 307.36 billion (Revised Estimates) for the current fiscal.The government had provided for Rs 443.42 billion of revenues from this head in this fiscal year.Telecom or communication services contribute revenue to the government in the form of licence fees and spectrum charges.Revenue earned from spectrum auction is also included.

However, there was a shortfall in projected revenue from the sector primarily because no auction took place in the current fiscal. Also, there wasashortfall in licence fee and spectrum usage charges because of declining profitability of mobile operators.

The Department of Telecommunications (DoT) has already sought the recommendations of Telecom Regulatory Authority of India (Trai) on price and timing of the next spectrum auction,However, the auction can be successful if there is an appetite among telecom operators to buy airwaves.In 201617, the government earned Rs 702.41 billion from communication services.

The Business Standard, New Delhi, 02nd February 2018

Household debt up, but India still lags emerging-market economies: RBI

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Retail inflation cools to a six-year low of 2.82% in May on moderating food prices

New Delhi: Retail inflation in India cooled to its lowest level in over six years in May, helped by a sharp moderation in food prices, according to provisional government data released Thursday.Consumer Price Index (CPI)-based inflation eased to 2.82% year-on-year, down from 3.16% in April and 4.8% in May last year, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed. This marks the fourth consecutive month of sub-4% inflation, the longest such streak in at least five years.The data comes just days after the Reserve Bank of India’s (RBI) Monetary Policy Committee cut the repo rate by 50 basis points to 5.5%, its third straight cut and a cumulative reduction of 100 basis points since the easing cycle began in February. The move signals a possible pivot from inflation control to supporting growth.Food inflation came in at just 0.99% in May, down from 1.78% in April and a sharp decline from 8.69% a year ago.A Mint poll of 15 economists had projected CPI ...

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