What Niti Aayog VC's interview reveals about government's budget plans

NEW DELHI: The government has time and again stressed that widening the tax base is one of its main priorities. In the lead up to the Union Budget for 2018-19, Niti Aayog vice chairman Rajiv Kumar, in an interview, has reiterated the stance, adding further that wiping off revenue deficit is more important than meeting

fiscal deficit

target.

(Read Niti Aayog VC's full interview here)
Let us first demystify things for you. To put it simply, revenue for a government is the money it receives from the public in the form of taxes. On the other hand, fiscal deficit refers to the difference between the total revenues earned and total expenditure of the government. A wider fiscal deficit thus, refers to greater debt for the state exchequer.

Government's target and how has it fared

For the fiscal year 2017-18, the government has set the target for revenue collection at Rs 15.15 lakh crore. As per the latest data released by the Controller General of Accounts (CGA), government's revenue receipts were at Rs 7.29 lakh crore in the first seven months (April-October) of the current fiscal, which works out to 48.1 per cent of the budget estimate for the entire fiscal. The figures are a shade below than that of last year where the government had mopped up 50.7 per cent of the target.

Alternatively, the government is aiming to limit the fiscal deficit to 3.2 per cent of the GDP. The data in this regard is a matter of concern as the CGA numbers mentioned above reveal that by October-end fiscal deficit has reached 96.1 per cent of the budget estimate and is in the danger of overshooting the target, mainly due to lower revenue realisation and rise in expenditure.

What does Niti Ayog VC's statement indicate

Rajiv Kumar has cleared his stand saying,"bringing revenue deficit to zero is far more important than fiscal deficit." He further adds that the government should push for disinvestments and widening the base of its flagship policies - JAM (

Jan Dhan-Aadhaar-Mobile

).

The government has already undertaken the initiative to revamp the direct tax structure in order to widen the tax base and rationalise the tax rates, including that of income tax.

(Also Read: What changes are planned for income tax)
Coupled with this, Kumar's pitch might well be Arun Jaitley's strategy for Budget 2018. If the government is thereby able to minimise the revenue deficit, it will naturally augur well for the state coffers and will in turn be instrumental in its bid to stay fiscally prudent.