FY 2019-20: The Mind Boggling Budget Math

 The announcement of Rs5.55tn tax revenue target is disconcerting at the very least. Even under a nominal GDP growth rate assumption, marginal revenues would land between Rs400-500bn, leaving us with a monstrous shortfall of ~Rs1tn in additional revenues. The FY20 revenue target has undoubtedly led us to an unchartered territory. It is unsettling therefore that the incumbent Finance Minister breezed past the tax target in its official announcement.
 Under the current circumstances, it is fair to assume that the government will have to leave no stone unturned in its quest to achieve the set target. Given that indirect taxes have empirically been the quickest route to higher revenues, GST seems to top the hit-list: a 1% increase (we pray for no more) can be expected in the upcoming budget. Read More


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