(1) We have a revenue deficit overshoot of 0.7% of GDP (2.6% VS. 1.9% budgeted).
That is about 1.18 trillion rupees of revenue deficit higher than budgeted
About 0.7 trillion comes from tax and non-tax collection shortfall.
0.189 trillion from Tax collection shortfall is the tax collection shortfall. It is made up as follows:
Indirect tax collections are off by 519 billion rupees. They are offset by better corporate tax collection (250 billion). The government expects to save 63 billion by transferring less to the National Disaster Fund. It transferred 16 billion rupees less than budgeted to States.
Whether the indirect tax collection shortfall is because of 11 months collection versus the usual 12 months or it is because of slower economic growth and tardy implementation is a matter of debate. I have friends who argue the former and friends who argue the latter and both are solid folks.
0.5 trillion from non-tax shortfall. Dividends and interest payments make up about 0.42 trillion. There is a shortfall of 0.061 trillion rupees on ‘Information and Publicity’ head. That gives you almost the entire 0.5 trillion shortfall.
On the expenditure side,
On the ‘other transfer’ to States which is the GST compensation shortfall , that is offset by the GST cess collected on luxury goods. That is not therefore an explanation.
[Parenthetically, the transfer to States and UT budgeted for 2018-19 of Rupees 90,000 crores in the ‘Dept. of Revenue’ budget is exactly offset by the cess expected to be collected. It is just earmarked. Debit and credit cancel each other out]
There is 0.3 trillion overshoot on the Establishment Expenses. Which must be mostly salary and pensions on account of Seventh Pay Commission.
I could identify 0.015 trillion from Defence Pensions and other Central Government pensions.
That is 50% of the Establishment Expenses Overshoot.
(Postscript: The total ‘Demands for Grants’ of all Ministries amount to 50% of GDP based on ‘Revised Estimates’ for 2017-18. I am rather surprised at this. What does it mean exactly?)