New Delhi, Feb 29 (IANS) Declaring that prudence lies in adhering to fiscal targets, Finance Minister Arun Jaitley on Monday retained the “much awaited figure” of fiscal deficit for the current financial year at 3.9 percent of GDP, and at 3.5 percent for 2016-17.
Presenting the union budget for the next fiscal in parliament. Jaitley said he had decided that prudence lies in adhering to fiscal targets, but while doing so he has also ensured that the development agenda is not compromised.
The finance minister said the estimate of revenue deficit for this fiscal has come down to 2.5 percent from the previous estimates.
The government has targeted reducing the fiscal deficit to 3.9 percent of the gross domestic product (GDP) in the current financial year, compared with four percent last year, and reduce it further to 3.5 percent in 2016-17.
The fiscal deficit for 2014-15 touched 4.1 percent of the gross domestic product.
The revised estimate (RE) of gross tax collections for this fiscal are around Rs.14.60 lakh crore, as against the budget estimate (BE) of nearly Rs.14.50 lakh crore. The budget estimate for the next fiscal on this count has been pegged at Rs.16.30 lakh crore.
The government’s fiscal deficit target of 3.9 percent for the current fiscal “seems achievable”, the 2015-16 Economic Survey said last week.
“Significant increase in revenue receipts, led by buoyant indirect tax collection, higher level of capital expenditure on the plan side, lower subsidies and enhanced untied resources transferred to the states following the acceptance of the recommendations of the 14th Finance Commission” were the basis of the government’s optimism on this count.
“The coming year is expected to be a challenging one from the fiscal point of view because of challenges posed by a lower-than-projected nominal GDP growth,” said the survey, which was presented in parliament on Friday.
“The chances of India’s growth rate in 2016-17 increasing significantly beyond 2015-16 levels are not very high, due to likelihood of persistence of global slowdown,” it said.
“The implementation of the Pay Commission recommendations and the ‘One Rank One Pay’ scheme will put additional burden on expenditure,” it added.
Moody’s Investors Service said earlier this month that India’s fiscal position will remain weaker than other emerging economies in the near term even if fiscal consolidation continued on course.
“Even if the budgetary consolidation continues, India’s fiscal metrics will remain weaker than rating peers in the near term, because of the relatively high levels of deficits and debts of India’s state and central governments,” Moody’s said in a report.
“The importance of the upcoming budget lies in its message on the government’s fiscal consolidation plans,” the American agency said.
“But at around 63.8 percent of GDP, India’s government debt ratio remains high compared with a median of 49.5 percent for Baa3-rated peers. Without continued fiscal consolidation, India’s government finances will continue to compare poorly with the peers,” it added.