The Economic Survey 2013-14 presented in parliament by Finance Minister Arun Jaitley said fiscal consolidation remains imperative for the economy, both in the current context and the years to come with the emphasis on maintaining the quality of adjustment.
It is better to achieve fiscal consolidation partly through a higher tax-GDP ratio than merely through reduction in the expenditure to GDP ratio, in view of the large unmet development needs, the report said.
The annual report, prepared by senior economic advisor in the finance ministry Ila Patnaik, said addressing the risk of food, fertilizer and petroleum subsidies is critical.
"Another challenge lies in improving tax buoyancy, and overall shortfall in non-debt receipts could be contained with greater efforts at mobilisation and reforms," it said.
The fiscal deficit for 2013-14 has been contained at Rs.508,149 crore (provisional), which is 4.5 percent of the country's gross domestic product (GDP). The corresponding figure for 2012-13 was 4.9 percent.
The primary deficit for the financial year ended March 31, 2014, is estimated at 1.2 percent of the GDP, while the revenue deficit is pegged at 3.2 percent.
The revenue receipts in 2013-14 was Rs.1,015,279 crore, 8.9 percent of the GDP. The gross tax revenue in 2013-14 are provisionally estimated to be Rs.1,133,832 crore which is 10 percent of the GDP.
The gross tax revenue has shown a decrease of 0.2 percent in terms of GDP over the previous year. The shortfall is mainly due to the poor performance of indirect taxes, the survey report said.
The total indirect tax collection for 2013-14 has been Rs.496.231 crore, while it was Rs.473,792 crore in 2012-13. The decline in expected revenue from indirect taxes was mainly on account of general economic slowdown, reduction in duty rates (both customs and excise), lower volume of imports of dutiable goods, and various exemptions.
The direct tax collection for 2013-14 has been Rs.633,473 crore. The percentage of direct tax revenues as part of GDP is 5.6 percent, while indirect tax revenues constitute 4.4 percent of the GDP.
The non-tax revenue during the year 2013-14 has gone up to Rs.199,233 crore, showing a significant increase of about 45 percent compared to the previous year, chiefly on account of dividends and profits and interest receipts.
Non-debt capital receipts which include recoveries of loans, disinvestment receipts and miscellaneous receipts decreased to Rs.36,644 crore in 2013-14.
The disinvestment programme has had limited success due to subdued market conditions and yielded Rs.27,555 crore.