India’s government expects tax revenues to exceed budget by 10% for the current fiscal, beating forecasts for the first time in four years, two officials said, as the economy returns to pre-pandemic levels.
Tax revenue, budgeted at ₹15.45 lakh crore for the year till March 31, has been below estimates since 2017-18 as the economy already lost momentum before COVID-19 and then slipped into a deep recession.
But now retail sales have picked up and exports are growing at a record rate, suggesting it is rebounding faster than expected after a disastrous second wave.
India’s economy grew 20.1% between April and June, compared to a 24.4% contraction in the same period last year.
“Activity level has improved greatly. All indicators are showing improvement faster than anticipated, we are well prepared to beat our [tax] This year is anticipated if all goes well,” said one of the officials.
The finance ministry did not immediately respond to emails and messages seeking comment on tax revenue.
If tax payments remain strong and the government is able to achieve the 2021-22 target for revenue from its ongoing privatization programme, it will be able to beat its fiscal deficit estimate of 6.8% by 30-40 basis points. Will be said another officer.
Air India, LIC Boost
India aims to raise Rs 1.75 lakh crore in the current fiscal through stake sale in state-run companies and the Tata group is expected to get a boost from the sale of Air India.
According to another official, the listing of state-owned Life Insurance Corporation could fetch another Rs 1 lakh crore. “We are working very hard to complete the listing of LIC and we should be able to complete it by March,” said the third official.
Rating agency Moody’s Investors Service this month stabilized its outlook on India from negative, saying the downside risk to the country and its financial institutions has eased.
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