Income Secretary Tarun Bajaj on Friday mentioned the economic system has not suffered as a lot this yr amid the second wave of COVID-19 as in comparison with final yr when there was full lockdown.
He additional mentioned if Rs 1.10 lakh crore will get collected each month on common by means of the Items and Providers Tax (GST), then the states’ GST income deficit can be round Rs 1.5 lakh crore this fiscal.
“If we take the identical methodology and system like final time, the hole (shortfall in GST mop up) is coming to about Rs 1.58 lakh crore. However not like final yr when there was a lockdown and the economic system suffered, this time the economic system shouldn’t be struggling as a lot,” Bajaj informed reporters after the 43rd GST Council assembly.
The Indian economic system contracted eight per cent within the earlier fiscal ended March 2021.
Final month, the RBI retained its progress forecast at 10.5 per cent for the present monetary yr, whereas ADB projected a progress charge of 11 per cent.
Nonetheless, score businesses have lowered progress forecasts for India, saying that the second wave of infections will hamper financial restoration. They, nevertheless, have estimated that the destructive impression on financial output shall be restricted to the April-June quarter.
The Centre has estimated the shortfall in GST compensation payable to the states within the present fiscal at Rs 2.69 lakh crore, of which Rs 1.58 lakh crore must be borrowed this yr.
The Centre expects to gather over Rs 1.11 lakh crore by means of cess on luxurious, demerit and sin items which shall be given to the states to compensate them for shortfall in income arising out of GST implementation.
The remaining Rs 1.58 lakh crore must be borrowed to satisfy the promised compensation to states beneath the GST regime.
Within the final fiscal 2020-21, the Centre had borrowed on behalf of the states and launched Rs 1.10 lakh crore to compensate them for the GST income shortfall.
One other Rs 68,700 crore was collected by the use of levy of cess.
Giving two eventualities, Bajaj mentioned if Rs 1.10 lakh crore GST is collected per 30 days, the deficit in states’ income can be Rs 1.50 lakh crore.
If Rs 1.15 lakh crore GST is collected month-to-month, then that deficit can be Rs 1.25 lakh crore.
So since Rs 1.58 lakh crore can be borrowed this fiscal in the direction of compensating states, the additional borrowing, over and above what’s the shortfall this yr, can be utilised to make good the shortfall in states’ income of earlier years.