Representative image: Pixabay/kshelton
The finance ministry has begun preparations for Budget 2021-22 and the the budget notification is expected to be announced within two weeks.
"The government will be taking FY 2019-20 as the base year in preparing its expenditure and revenue receipts, instead of FY 2020-21 because of the economic situation," a senior government official told Moneycontrol.
The country is grappling with the economic fallout of the nationwide lockdown imposed to contain the spread of Covid-19 pandemic. This led to the government's revenue projections for FY 2020-21 coming under strain.
"That's why we cannot use this year as a basis to make projections for the next financial year," the official said.
The government is expecting its revenue to be much lower than what had been budgeted for in FY21 and expenditure would be higher. "In order to have a realistic comparison, we have to take FY 2019-20 as the base year," the official said.
In order to meet the financial situation arising out of the Covid crisis, the centre revised its borrowing to Rs 12 lakh crore, from Rs 7.8 lakh crore announced earlier.
"But for debt, the borrowing for 2020-21 will have to be taken into account. The extra debt incurred this year would have to be counted for," the official said.
The centre would issue G-secs worth Rs 6.98 lakh crore in April-September, compared to the earlier Rs 4.88 lakh crore. The government is also reportedly working on a second stimulus package, that is expected to be announced in the second half of the current financial year.
While lockdown restrictions have been eased considerably across the country, the months-long closures since the end of March have taken a toll and demand and growth have suffered in consequence. India's gross domestic product (GDP) growth for the April-June quarter contracted 23.9 percent, the steepest drop since records began, against a growth of 5.2 percent in the same period last fiscal.
Goods and Services tax (GST) collection for the month of August stood at Rs 86,449 crore, down 12 percent from last year. The mop up continued to remain below the Rs 1 lakh crore mark.
The centre’s fiscal deficit for 2019-20 came in at 4.6 percent of nominal gross domestic product, as against a revised estimate of 3.8 percent, and budget estimate of 3.3 percent.
Total revenue for 2019-20 was Rs 17.5 lakh crore, compared to revised estimates of Rs 19.32 lakh crore. Net tax revenue for 2019-20 was seen at Rs 13.56 lakh crore, which was 90 percent of revised estimates.
Non-tax revenue was Rs 3.26 lakh crore (94.4 percent), while non-debt capital receipts were just 84.1 percent of revised estimates, primarily because of poor divestment receipts.