Goods & Service Tax-GST on unexpected lines has dwindled to if a not a jittery low but to worry Arun Jaitley, the Finance Minister who is expected to present a budget for 2018-19. That too just when parliamentary elections are to be held in 2019. When introduced, GST collections stood at an attractive figure of Rs.94,063 crore in July, Rs.90,669 crore in August, Rs.92,150 crore in September, Rs.83346 crore in October, falling steadily. This may upset the budget strategy of Narendra Modi, as the trend seems to be on a slippery slope.
This revenue fall may put the government on the back foot on the rate structure, which may create unforeseen problems. On the other hand, the GST is yet to be fully understood by the traders. Furthermore, Finance minister was forced to reduce GST on many items against the hue and cries by the public and traders, reduction in almost 200 items from November 15, 2017, would show a bleak picture for November & December 2017.
The revenue shortfall may be due to GST rates and its compliance might have a temporary downward trend. but Arun Jaitley and company have to seriously brude on how to overcome the deficit and yet see fairly accurate collections in the coming months and next financial year.
Narendra Modi's last full budget during their present tenure, It is going to be extremely difficult to bring in vast changes in the tax regime. If revenue collection fails to reach the target, Arun Jaitley will face an uphill task as he has pronounced to maintain fiscal deficit target of 3.2 percent during this year.
GDT figures in July-September quarter of 6.3 percent from 5.7 percent in the previous quarter, gave the boost in the manufacturing sector. On one hand, crude oil, commodity prices are moving upwards giving a hint of increased expenditure, whereas people expect some populist budget freebees.
It is a situation where the pendulum is oscillating to extreme ends, Arun Jaitley has to take a leaf out of his experience to come out unscathed.