How ₹1.7 trillion has gone missing from govt’s budget

The revenue receipts of the government for 2018-19, as stated in the Economic Survey and the annual budget, don’t match. In the case of the budget they stand at ₹17.3 trillion, whereas in the Economic Survey they are at ₹15.63 trillion. The difference comes to a huge ₹1.67 trillion. Mint explains why this confusion exists.

1. What are revenue receipts?

The government earns money through various taxes. The main taxes of the central government are corporation tax (income tax paid by companies), income tax paid by individuals, goods and services tax (GST), Union excise duties and customs duty. A little over a third of these taxes is shared with state governments. What remains is the Centre’s net tax revenue. When we add this to the non-tax revenue, things such as dividends received from public sector enterprises, banks, financial institutions and the Reserve Bank of India, what we get is revenue receipts earned by the Centre during the course of a year.

2. Why is there a confusion?

When the budget for the coming fiscal is presented, a budget estimate of revenues and expenditures is made. In the next year’s budget, a revised estimate of these revenues and expenditures is made. Two years later, the actuals are presented. In between, the controller general of accounts (CGA) publishes the government accounts for the last fiscal on 31 May every year. This has basically caused all the confusion about the different revenue receipts being used in the Economic Survey and the annual budget of the central government. However, this is not the first time something like this has happened.

3. Why are the revenue receipts not matching?

When the budget for 2018-19 was first presented in February 2018, a budget estimate of the revenue receipts was made. This was at ₹17.26 trillion. When the interim budget was presented in February 2019, the revised estimate was ₹17.3 trillion. On 31 May, CGA published the accounts for 2018-2019, in which the revenue receipts of the government were at ₹15.63 trillion. The CGA estimate is a provisional one. The Economic Survey published both the provisional estimate and the revised estimate. The budget published only the revised estimate. This is where all the confusion was created.

4. What did this lead to?

CGA’s estimate published in May is more accurate. When the revised revenue receipts were published in February, at the time of the interim budget, some of the taxes the Centre hoped to earn, were still optimistic. The central GST was budgeted at ₹6.03 trillion and later revised to ₹5.03 trillion. The Centre finally earned ₹4.58 trillion. As the Centre didn’t earn the taxes it was hoping to there is a gap between the revenue receipts.

5. Is this happening for the first time?

After every interim budget, the Centre uses the revised estimates in the budget and doesn’t consider CGA’s provisional estimates. In 2014 and 2009—the last two times there was an interim budget—the gap between the revised estimates of revenue receipts and the provisional estimate wasn’t huge. As per the FY20 budget, revenue receipts need to go up 13.5%. They need to rise nearly 25.6% actually.