Covid-19 pandemic may change the baseline for the preparation of next year’s budget with the government likely to use 2019-20 numbers to give estimates for FY22.
Highly placed government sources said that the pandemic has brought about extraordinary situations that needed extraordinary solutions.
Basing FY22 budget estimates on FY20 numbers would help in providing a correct picture about the projections on taxes and expenditure as the pandemic completely turned the budget estimates of FY21 topsy turvy, the source said.
The change of the base year for making estimates would also prevent the government from taking up the fiscal deficit numbers further and restraining expenditure.
The concern over the changes is coming from the tax numbers that have come during the first half of current fiscal. Against the tax revenue target of Rs 16.36 lakh crore for FY21, in the first half period (April-September), total tax collections have been to the tune of only Rs 4.58 lakh crore or just about 28 per cent of the budget target.
The overall revenue receipts has been only 27% of the target set for the current fiscal against 42% achieved a year ago. The government’s revenue was Rs 5.50 lakh crore in H1 FY21.
Against this, the total expenditure during the first half of the year stood at Rs 14.79 lakh crore. That’s 49% of the full-year target compared with 53% spent last year. In the same period last year, the government had spent Rs 14.88 lakh crore.
Accordingly, the country’s fiscal deficit touched 115% of the budgeted target in the first half of 2020-21.
“The FY22 tax estimates may be extrapolated on FY20 levels. With the economy expected to rebound by the third quarter of next fiscal, the numbers estimated now can be balanced,” said the source.