Govt May Miss Tax & Disinvestment Mop-up Targets This Fiscal Year Due to Coronavirus Crisis

New Delhi: The government is likely to fall short of its revenue collection estimates in the current fiscal and may face challenges meeting the same in the next as the coronavirus pandemic slows down demand and economic activity.

For an economy that has already slowed down to an 11-year low rate of growth, the outbreak of coronavirus has impacted sectors such as tourism and hospitality after the government placed visa restrictions.

As the impact of coronavirus is widely expected to stay till June-end, officials expect mop-up from disinvestment and taxes to falter, even as oil price fall is likely to make up for the loss in revenue receipts for the current fiscal.

"While lower international oil prices will lead to lower current account deficit and inflation, reduced economic activity will dampen tax mop-up," an official said.

However, the decline in oil prices could have a bearing on the strategic sale plans for BPCL which has seen an erosion in market capitalisation over the last month.

Global oil prices declined 20 percent to USD 35 a barrel following the collapse in cooperation between Saudi Arabia and Russia to limit supplies.

Further, the coronavirus scare has also derailed CPSE disinvestment plans as international roadshows have been put on hold and minority share sale plans had to be deferred due to a crash in the domestic stock market.

The 30-share BSE Sensex closed 2,919.26 points or 8.18 percent lower at 32,778.14 on Thursday, recording its biggest ever one-day plunge.

The government had in the revised estimates (RE) in Budget pegged proceeds from disinvestment at Rs 65,000 crore.

With the government so far raising about Rs 35,000 crore, the proceeds are likely to fall short by a huge margin of about Rs 15,000-20,000 crore in the current fiscal, officials said.

The only big-ticket disinvestment lined up is NTPC acquiring the government's entire stake in THDC and North Eastern Electric Power Corporation Ltd (NEEPCO).

The government has collected over Rs 7.52 lakh crore as direct taxes till January 31 of the current fiscal.

As per revised estimates, the direct tax collection target has been pegged at Rs 11.70 lakh crore for the current fiscal ending March.

Officials said the government is not yet revising its 6-6.5 percent economic growth target fixed for 2020-21 fiscal, up from an estimated 5 percent in the current financial year.

The total number of coronavirus cases in India rose to 73 on Thursday.