The government is likely to fall short of its revenue collection estimates in the current financial year (FY20) and may face challenges meeting the same in the next fiscal as the coronavirus pandemic slows down demand and economic activity. For Indian economy that has already slowed down to an 11-year low of 4.5% in the July-September quarter of FY20, the outbreak of coronavirus has impacted sectors like tourism and hospitality after the government suspended all tourist visas and e-visas.
As the impact of coronavirus is widely expected to stay till June-end, mop-up from disinvestment and taxes are likely 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. However, the decline in oil prices could have a bearing on the strategic sale plans for BPCL which has seen erosion in market capitalisation over the last month.
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. 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.