The government is likely to breach the fiscal deficit target this year by 300 basis points (bps), from 3.2% to 3.5% of the GDP, clearly going off the fiscal deficit roadmap as laid down by it earlier. One of the reasons that the finance minister and the bureaucrats in the ministry have been citing for this slippage is the fact that they have accounted for only 11-month of GST against 12-month of expenses.
Explaining this, finance minister Arun Jaitley recently said in an event at industry association FICCI: “In the old regime, you would get paid the tax in same month the liability is accrued, but in GST you get paid only by 20th of the next month. So in the current fiscal, the March GST would only come in April. Therefore, we have accounted only for 11-month of GST.”He further says, “So when people talk about the so-called fiscal slippage, they conveniently overlook that it is 12 months of expenses and only 11 months of GST. So, to stick to the fiscal target with a one-month revenue is very difficult.” The minister adds that if we account for the Rs 36,000 crore additional revenue from one month of GST, it would cover a significant portion of the 300 bps slippage.