Impact of Lockdown on Government Revenue
Distilled Policy Brief
- In the Union Budget 2020-21, 73% of the central government's total revenue (Rs 16.36 lakh crore) was expected to come through taxes, while non-tax revenue and capital receipts relied heavily on RBI dividends and PSE disinvestment.
- A 1%-point fall in nominal GDP growth could decrease the Centre's net tax revenue by about Rs 15,000 crore, and a projected nominal GDP growth drop to 6% could result in a tax revenue loss of about Rs 60,000 crore.
🎯 Prelims High-Yield Examination Points
Union Government revenue receipts composition for 2020-21 including net tax revenue share (73%), non-tax revenue, and disinvestment targets.
⚖️ Mains Analytical & Syllabus Linkages
Analyze the fiscal implications of economic lockdowns on federal revenue collections, fiscal federalism, and deficit management.
🎯 UPSC Prelims Practice Drill
With reference to the fiscal impact of the nationwide lockdown on the Union Budget 2020-21, consider the following statements: 1. According to the budget estimates, nearly three-fourths of the central government's total revenue was expected to be generated through taxes. 2. A decline in nominal GDP growth is projected to negatively impact tax revenues, with a 1%-point fall potentially decreasing the Centre's net tax revenue by about Rs 15,000 crore. Which of the statements given above is/are correct?
- [A] 1 only
- [B] 2 only
- [C] Both 1 and 2
- [D] Neither 1 nor 2
▶ Reveal Official Answer & Analytical Explanation
Statement 1 is correct because the Union Budget 2020-21 expected 73% of the central government's total revenue to come through taxes. Statement 2 is also correct as projections indicated that a 1%-point fall in nominal GDP growth could decrease the Centre's net tax revenue by about Rs 15,000 crore.
🏛️ Historical Twin PYQ Anchor (2021)
Consider the following statements regarding the "National Clean Air Programme (NCAP)": 1. It is implemented by the Ministry of Environment, Forest and Climate Change. 2. Central Pollution Control Board acts as the sole regulatory executive body.