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India Ratings and Research (Ind-Ra) in its latest report has said that higher tax and non-tax revenue collections this fiscal are expected to more than offset the shortfall in disinvestment revenue, leading to the fiscal deficit coming in at 6.6 per cent of GDP in FY22, or 20 basis points lower than the budgeted target. As per the agency, the data relating to the Union government finances show that tax collections so far have immensely benefitted both from growth and inflation. While the GDP growth is benefitting due to the lower base of last year, higher inflation (GDP deflator) has led to the economy registering higher nominal GDP growth and thus helping higher tax collections.

As per the report, the gross tax revenue collection in FY22 is expected to be Rs 5.9 trillion higher than the budgeted figure, with the share of corporation tax being 28.4 per cent, income tax 16.3 per cent, GST 14.7 per cent, custom duty 14.2 per cent, excise duty 22.4 per cent and others 3.9 per cent. As a result, the share of direct tax in the expected additional gross tax revenue collection works out to be 44.7 per cent and that of indirect tax 55.3 per cent. On the whole, the share of direct taxes in the gross tax revenue of FY22 is expected to increase to 48.9 per cent in FY22 from 45.8 per cent in FY21. Like tax revenue, even the non-tax revenue is expected to come in higher than the budgeted figure in FY22. Non-tax revenue is forecast to reach Rs 3.1 trillion in FY22 as against the budgeted Rs 2.4 trillion.

However, capital receipts are lagging and, despite growing 20.3 per cent YoY during April-October 2021, were only 10.5 per cent of the FY22 budgeted amount. If the first seven months of FY22 is an indication, then once again the disinvestment target of Rs 1.75 trillion will be missed by a big margin. Till October 2021, the total disinvestment proceeds have been just Rs 93.64 billion, which is only 5.4 per cent of the target. On the expenditure front, the Union government has brought in two supplementary demands for grants -- one for Rs 236.75 billion and the other one for Rs 2.992.43 billion after the presentation of general budget on February 1, 2021. This will lead to total expenditure commitments of Rs 38.1 trillion in FY22.