While an upside in GDP calculations in nominal terms due to high inflation will likely help the fiscal arithmetic, additional levies in the form of windfall taxes and excise duties that were expected to potentially boost the government’s revenue kitty during the year are now expected to come in at lower than expected levels. Though there is the cushion of incremental tax revenues, the government faces the prospect of walking a tightrope to manage its fiscal arithmetic as it simultaneously grapples with additional expenditure requirements of Rs 2.5-3 lakh crore, officials told The Indian Express. Incremental expenditure include the provisioning being done for the recently announced recruitment drive for 10 lakh personnel and the stepping up in allocations for security and administrative preparations for the G20 summit to be held in India over the course of the next year.

Though overall tax revenues have been boosted by buoyant direct taxes and steady Goods and Services Tax (GST) collections, both customs and excise duties and other indirect tax levies on items outside of the GST regime are seen lagging behind, alongside windfall taxes on fuel. While windfall taxes are expected to garner around Rs 30,000-35,000 crore this fiscal, revenues from excise duties and customs are expected to fall short by an estimated Rs 90,000 crore from the Budget target, officials said.

Other revenue sources are also not showing a strong uptick with disinvestment yet to show full strength with just 43 per cent of the overall Budget target of Rs 65,000 crore being collected in the first half of this financial year at Rs 28,382 crore.

The overall tax revenues, however, are seen significantly higher, with a gain of about Rs 3 lakh crore from GST and direct taxes in the form of income and corporate taxes as against the Budget target. Direct taxes are seen higher by 25 per cent from the Budget estimate of Rs 14.2 lakh crore, Central Board of Direct Taxes (CBDT) Chairman Nitin Gupta said last week. So far, net direct tax collections till November 10 rose 26 per cent from a year ago to Rs 8.71 lakh crore, accounting for 61.3 per cent of the total budget estimate for the fiscal. GST revenues accruing to Centre in the form of Central GST has been at Rs 3.4 lakh crore, nearly 52 per cent of the Budget estimate of Rs 6.6 lakh crore.

“Windfall taxes have not resulted in high revenues as was estimated earlier and the numbers are hardly going to make a big difference in the overall fiscal math. There are challenges for expenditure in form of subsidies, which to an extent will get managed through additional GST and direct tax revenues. Some expenditure cuts could become necessary and we are considering partial borrowings from small savings,” a senior government official said.

The government had accounted for Rs 3.18 lakh crore for food, fertiliser and fuel subsidies. Over Rs 2.5 lakh crore is estimated to be additional expenditure for these subsidies, which is unaccounted for in the Budget. Earlier this month, the Union Cabinet approved an additional Rs 51,875 crore for nutrient-based subsidy for fertilizers. In October, the government gave nod to extend the subsidised foodgrains programme beyond the September deadline only for 3 months amid concerns flagged by the Finance Ministry and any other extension beyond December would add to the fiscal stress.

Officials, however, maintain that the government will stick to its fiscal deficit target of 6.4 per cent of the GDP for FY23.