NSO's GDP forecast is tell-tale of sop-free Budget

The country's Gross Domestic Product (GDP) contraction will be around 7.7 per cent in the current fiscal, after an 11-year low growth of 4.2 per cent in 2019-20, as per the advance estimate revelation made by National Statistical Office (NSO).

Advance estimates assume significance for a simple reason that the forthcoming Union Budget, slated for February 01, will use these numbers for assuming GDP growth rate at current price for the financial year 2021-22.

Of course, services and manufacturing sectors have taken a hit due to the Covid-19 -related lockdown. The farm sector offers the only solace. Only those services comprise 55 per cent of GDP, whereas agriculture comprises merely 13 per cent.

After a record quarterly slump of 23.9 per cent in June, the GDP had started showing green shoots from July onwards and stood at -7.5 per cent in September quarter.

Total GST revenue collected so far in the current fiscal is Rs 7.80 lakh crore, which comes as a great relief and provides a comparison benchmark). Even excise duty, retail oil cess in particular, was also helping enrich the nation's kitty. No matter, if the situation was not conducive on direct taxes' front.

The share of indirect taxes in overall tax collections rose to about 56 per cent, while there was a sharp 26-27 per cent decline in direct tax collections. Even though indirect tax revenue may continue to do well in the remaining part of the current fiscal too, there was no hope of any improvement in direct tax collection for obvious reasons.

Government did take some harsh measures in forms like freezing of dearness allowance to its employees, slashing the salary of MPs by 30 per cent and also freezing their local area funds. However, these steps proved to be mere peanuts. One should not expect that the fiscal deficit, which was currently staggering at 3.5, will be tamed.

Yes, the stock market may provide some cushion. Sensex is hovering around 49,000 and no wonder if it crosses magical 50K mark soon.

The chance of doling out of any freebies as Budgetary sops, at a time when the country was faced with prolonged pandemic, are remote. The nation is counting on the roll out of vaccine that kick starts on January 16 in a phased manner. The vaccine is not a cure, still it can slow the spread of Covid-19 from further spread.