Former finance secretary Subhash Chandra Garg on Thursday stated the federal government is prone to face a shortfall of round Rs 10 lakh crore in 2020-21 as a result of Covid-19 pandemic. In a weblog, Garg stated the federal government’s tax and non-tax revenues are prone to decline by round Rs 5 lakh crore, whereas on the expenditure facet further financing of about Rs 6 lakh crore could be required.
“There is prone to be a further shortfall of not lower than Rs 10 lakh crores within the monetary 12 months 2020-21. “…The solely possible and the least disruptive measure is to monetise this extra deficit and the RBI to satisfy this financing requirement,” he stated.
Elaborating on the fiscal scenario, the previous finance secretary stated that oblique taxes, GST, excise responsibility on petroleum merchandise and customs will under-perform. “Disinvestment programme is likely to remain grounded for quite sometime resulting into substantial under performance,” he stated.
Garg identified that there’s a requirement of a survival bundle for sustaining the lives of over 10 crore employees who’ve been rendered jobless. Noting that the choices of resorting to family financial savings or issuing particular bonds like COVID bonds are unlikely to be of a lot assist, he stated, “Forcing this additional borrowing requirement on banks and other financial institutions is likely to be more counter-productive.”