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02

Fiscal Developments

CHAPTER

In the backdrop of an evolving pandemic situation, Government of India’s agile policy
response differed from the waterfall strategy of introducing front-loaded stimulus
packages, adopted by most other countries in 2020. Immediately after the COVID-19
outbreak, Government of India chose to first create safety-nets for the vulnerable sections
of the society/ small businesses before going on to introduce stimulus packages to boost
economic recovery in the second half of 2020-21. On the fiscal front, capital expenditure
was restrained during Q1 and Q2 of 2020-21 owing to movement restrictions in
containment zones, and unavailability of contractors/workers to carry out capital works.
However, with the easing of movement and health-related restrictions, capital spending
was pushed up in Q3 of 2020-21. Thus, the change in the mix of stimulus effected in
2020-21 towards a larger share of capital spending, has continued in the current year as
well. The stimulus measures announced so far during the year 2021-22 include liquidity
enhancing and investment boosting measures such as the Production Linked Incentives
scheme, credit guarantee schemes and export boosting initiatives.

With the bouncing back of the economy in the current financial year, the revenue receipts
of the central government during April to November 2021 have gone up by 67.2 per cent
(YoY), as against an expected growth of 9.6 per cent in the 2021-22 Budget Estimates (over
2020-21 Provisional Actuals). The buoyant tax collections of both direct and indirect taxes,
along with the non-tax revenue boosted by RBI’s surplus transfer to the Government, have
contributed to the increase in the revenue pool. The gross tax revenue during this period
has registered a growth of over 50 per cent in YoY terms. This performance is strong not
only over the corresponding period of the previous year but also when compared to the
pre-pandemic levels of 2019-20. The gross monthly GST collections have crossed the
` 1 lakh crore mark consistently since July 2021, after quickly recovering from a dip
in June 2021 following the second wave of COVID-19. The impact of the second wave
of COVID-19 on GST collections was much more muted as compared to the first wave.
The ongoing improvement in revenue performance during the current year can also be
attributed to increased tax compliance enabled by various tax administration and policy
reforms implemented by the Government in the past few years.
The New Public Sector Enterprise Policy and Asset Monetisation Strategy introduced by
the Government reaffirm its commitment towards privatization and strategic disinvestment