FISCAL DEFICIT SEEN LOWER THAN 3.5% OF GDP IN FY18

NEWDELHI: India’s fiscal deficit will be narrower than the revised budget estimate of 3.5% of gross domestic product (GDP) i n 2017-18, government officials said on Monday, amid concerns that the government may overshoot the target.

The statement comes ahead of the Reserve Bank of India’s monetary policy committee meeting to review policy rates, scheduled for April 4-5.

In this year’s budget, finance minister Arun Jaitley had revised the fiscal deficit target for FY18 upwards to 3.5% of GDP or ₹5.94 lakh crore from 3.2% of GDP or ₹5.46 lakh crore. Buoyant direct tax collections and record divestment proceeds exceeding ₹1 lakh crore have helped the government in meeting its fiscal deficit.

“With almost all of revenues and expenditure accounted for (some minor accounting adjustments remaining), I can confirm that both fiscal deficit and revenue deficit are lower than the revised estimates for 2017-18,” Subhash Garg, secretary, department of economic affairs, wrote on Twitter. Revenue deficit was revised upwards to 2.6% of GDP from 1.9% in the budget.

Separately in a press conference, finance secretary Hasmukh Adhia said buoyant tax collections, especially on the direct tax side, have helped in meeting the fiscal deficit target. “It was a year of uncertainty in revenues. We have broadly met our targets both on the direct tax and indirect tax side,” said Adhia.

And this has been achieved without any major expenditure cuts. “There were no major expenditure cuts but there were some natural savings as some departments were not able to spend the money allocated to them by March 31.”

Direct tax collections in FY18 are estimated at ₹9.95 lakh crore and this number is expected to be revised upwards to more than ₹10 lakh crore as the final figures come in, said Sushil Chandra, chairman of the Central Board of Direct Taxes. While growth in corporate tax collections was 17%, it was 19% for personal income tax. Further, 68.4 million returns were filed in 2017-18 (of which 67 million were through e-filing), as against 54.3 million returns in the previous year.