The interim budget has announced a slew of welfare measures for farm and rural economy, middle class, realty and housing and the unorganised sector. The burden on the exchequer due to the farm income support scheme PM-KISAN itself comes around Rs 75000 crores. This necessitates the government to explore the avenues to find the corpus to pay for these schemes.
Revenue Mobilisation
The government is exploring the following avenues to fund welfare schemes:
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Large dividend transfers by the Reserve Bank of India and PSUs to balance the Budget deficit after funding the welfare schemes.
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The government is expecting Rs 82,911 crore through dividend from banks, financial institutions and the RBI in 2019-20.
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In 2018-19 the government estimates receipts of Rs 74,140 crore from banks, financial institutions and the RBI, much higher than the budget estimate of Rs 54,817 crore.
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The government is estimating Rs 53,200 crore as PSU dividend in 2019-20.
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The government is expecting to raise anywhere between Rs 12,000 crore and Rs 20,000 crore through the CPSE buyback route.
Challenges in Revenue Mobilisation
The revenue from the Goods and Service Tax (GST) for the most part of the year has lagged behind the Rs 1 lakh crore monthly target. The government’s efforts at disinvestments are also not yielding desired results. The government’s planned stake sales in state-run firms are still short of the target.
As a result, the government is heavily dependent on the dividends from state-run firms, financial institutions and the RBI to fund its additional expenditure. The government has pegged dividends at Rs 1.36 lakh crore in 2019-20 which is a 14 per cent rise from an already elevated dividend collection of Rs 1.19 lakh crore in 2018-19.