【New Delhi】Given the spread of Covid-19 and its impact on domestic and global demand, India's economic growth could fall considerably from the budgeted level.
When the Centre assumed tax buoyancy of 1.2 for FY21, as against just 0.5 seen in FY20 (revised estimate), many thought that it was optimistic, if not unrealistic.
Assuming the actual nominal GDP growth for FY21 at 8% as against the budgeted 10%, the tax buoyancy required to achieve the budgeted growth in gross tax receipts (GTR) of 12% will be an impossible 1.5.
Put differently, even if the assumed tax buoyancy of 1.2 holds true, the lower GDP growth would result in a tax revenue (GTR) shortfall of Rs 1.5 lakh crore next fiscal, from the budgeted Rs 24.2 lakh crore. Of course, since the buoyancy budgeted is really high under current circumstances, the GTR shortfall will likely be far higher.
Growth pangs: Budget plans may go haywire as Covid-19 wreaks havoc
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