The year 2020 has been a very unpredictable year in the history of humankind that left a very brutal impact on the world economy.
Although the economy is recovering at sharp rate but the prevailing weaknesses are unavoidable. A 7 percent fiscal deficit is expected for the financial year 2021 but it would be kept in view point of credible path going forward.
Owing to the contradiction of economic activities a decline in tax revenues is expected.
However, more tensions lie in the decline of non-tax revenue or lower dividends. It will cause an inability to meet the disinvestment targets.
According to the situation, there are high hopes regarding the tax revenue’s normalization on a rational note.
The estimates of the lower dividend revenues and disinvestments are the prime sources, and thus they need to be under extra care.
The shares of states in the Center’s taxes would come down to 41 percent over the period of 2020-2021. It was previously at 42 percent during 2015 – 2020. It is believed to boost further revenues.
Also, the financing expenditure with the help of borrowings is the exact potion required. On the contrary, India’s public debt is expected to be comprising of more than 85 percent of India’s GDP.
So, it would be optimistic and also important to maintain lower interest rates along with expenditure growth.
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