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Hema Ramakrishnan
Shaji Vikraman

"Even a shortfall in the range of Rs 3,000-4,000 crore in direct tax collection vis-a-vis revised targets is not a cause for panic. This is because the final borrowings — the bottom line pointing to any possible slippage in fiscal deficit target — are well within the revised estimates for 2001-02."

NEW DELHI, April 8

THE Government has missed its revised targets for direct tax collections once again in 2001-02 owing to hefty refunds paid to corporates.

According to provisional estimates, the gap between revised target for net direct tax collections and actual collections is over Rs 6,000 crore during 2001-02. Refunds have aggregated to Rs 17,000 crore, marking a Rs 5,000-crore increase over the refunds forked out in 2000-01.

Senior Finance Ministry officials, however, maintained that the gap would be bridged substantially once the tax deducted at source (TDS) of Government employees was factored in.

"Even a shortfall in the range of Rs 3,000-4,000 crore in direct tax collection vis-a-vis revised targets is not a cause for panic. This is because the final borrowings — the bottom line pointing to any possible slippage in fiscal deficit target are well within the revised estimates for 2001-02," said a senior Finance Ministry official.

The Government has targeted a fiscal deficit of 5.7 per cent of the GDP during 2001-02. The revised estimate for gross borrowings stood at Rs 1,32,979 crore as against the Budget estimate of Rs 1,18,852 crore.

According to provisional figures, net direct tax collections grew by a modest 2 per cent to touch Rs 67,300 crore during 2001-02. The realisation falls short of the revised estimate of Rs 73,942 crore by around Rs 6,600 crore. With data being updated on a daily basis, final figures are expected to be available only by the end of this month.

The break-up indicates that corporate tax collections posted a near 4 per cent increase to top Rs 35,998 crore. Income-tax collections grew by a mere 0.7 per cent to touch Rs 30,736 crore. Collections from other taxes including interest tax and expenditure tax touched around Rs 566 crore.

The Government was, in fact, pinning its hopes on the fourth instalment of advance tax, which was due by March 15 to shore up its direct tax revenues. It had, on the contrary, forked out refunds of around Rs 17,000 crore during 2001-02 as compared to around Rs 12,000 crore in 2000-01.

While a detailed analysis of the revenue trends and its impact on the fiscal deficit will be done in the next few weeks, officials do not rule out a further compression in expenditure which could have brought about the match between revenue and expenditure.

With the disinvestment exercise gathering momentum after January, the Government will achieve the revised target of Rs 5,000 crore. The revised estimates on dividends and profits (which form part of non-tax receipts) are higher at Rs 18,291.61 crore as compared to the Budget estimate of Rs 16,229 crore. This is mainly on account of the special dividend payout by VSNL.

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