India is stepping up efforts to collect tax arrears of about $117 billion to achieve its fiscal deficit target. The government is seeking periodical reports from tax officials to improve collections, according to a Reuters report.
However, the amount that can be "realistically" collected is about 15-20 percent of what the government is targeting, the agency said, citing a tax official.
"The finance minister asks almost every week how much tax arrears have we recovered," it quoted a senior finance ministry official as saying.
The tax-to-GDP ratio in India is 16.6 percent, the lowest among emerging economies. Also, at $117 billion, the arrears are about four times the figure reported six years ago, according to the agency.
The government is keen to collect the amount since it has set an ambitious target to rein in fiscal deficit at 3.5 percent of the gross domestic product (GDP) for 2016-2017, besides ambitious plans to spend on upgrading infrastructure.
The government has also budgeted to raise Rs. 56,500 crore through disinvestment in the current financial year.
Simultaneously, the government's expenditure will be under strain due to the implementation of the 7th Central Pay Commission proposals and the One Rank One Pension (OROP) scheme for ex-defence personnel.
The 7th Central Pay Commission had suggested an average hike of 23.5% in pay and allowances for about 47 lakh Central government employees and about 52 lakh pensioners.
The government collected Rs. 14.60 lakh crore in taxes, both direct and indirect in financial year 2015-16, as against budget estimate of Rs. 14.45 lakh crore and revised estimate of Rs. 14.55 lakh crore. The combined collection was 17.6 percent more than that of in financial year 2014-15, according to a finance ministry statement issued this month.
India's tax arrears are higher than the government's estimated market borrowing target of $90 billion for the current financial year, added Reuters.