The Indian government's fiscal deficit has already reached 135% of Budget Estimate (BE) till November, owing to weaker revenues.
The State Bank of India (SBI) in a report said that there could be an overall shortfall in GST collection of Rs 1.44 lakh crore for Centre, which in turn limits the expenditure that the government can incur looking ahead.
"Corporate taxes collections so far are only 27% of BE and income tax are only 37% of BE. The higher excise duties 74% of BE have provided some respite to government revenues. Meanwhile, GST (Goods and Services Tax) collections are also below the budget estimates of Rs 6.9 lakh crore," SBI said.
The report said that states have borrowed 41.5% more than last year till now, though the gap between last year and this year's cumulative revenue is narrowing as GST collections have improved.
"As per our projections, if 50% of the IGST (Integrated GST) collected is disbursed to sates by Mar'21, then state GST shortfall can narrow down to around Rs 25,000 crore after taking into account the full compensation cess," the report said.
However, the April-December average allocation shows that states have got only 31% of the allocated IGST. The report said that if the centre kept 60% of the IGST revenue, then the states could be staring at a shortfall of around Rs 79,000 crore.
"This can help them in maintaining their expenditure, which was budgeted at Rs 33.27 lakh crore for FY21," the report said.