The government plans to use taxation to fund welfare programs

Two government sources Reuters that the government will use the substantial increase in to fund welfare programs instead of trying to exceed its fiscal deficit target or reduce borrowing.

The country will exceed the income target of 15.45 billion rupees (US$207.77 billion) for 2020-21, which is the first breakthrough in four years, but most of the extra cash will be used for rural employment programs and providing free grain to the poor.

After cutting fuel taxes this week to curb price runaways, the government may also lose 55,000 crore to 60,000 crore in additional revenue.

An official, who asked not to be named, said: “Even after the fuel tax is lowered, we should be able to exceed this year’s taxation target, but we will use the funds for rural employment programs and subsidies.”-Sensitive figures.

“The fiscal deficit and borrowing will be at the level of budget estimates.”

The Ministry of Finance declined to comment.

Before the fuel tax cut, many economists had predicted that India would its 6.8% fiscal deficit target by 30-50 basis points in the year ending March 31. Market participants also expect the government to review its 12 rupees budget borrowing before starting discussions on the next budget that will be on February 1.

The second official stated that Prime Minister Modi’s government plans to increase its rural employment security work by up to 30,000 crore, which has exhausted the 73,000 crore allocated for the current fiscal year.

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Officials said the government must also provide an additional 50,000 crore each for its free food drive and exporter incentive programs.

The government also approved an additional fertilizer subsidy of Rs 40,000 crore.


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