Govt misses fiscal deficit target, higher at 3.5% in FY’18
Finance minister Arun Jaitley has set the fiscal deficit target for 2018-19 at 3.3% of the gross domestic product (GDP) to accommodate higher demand for expenditure against the earlier target of 3%.
The government also revised the deficit target for the year ending in March 2018 to 3.5% of GDP from the targeted 3.2%.
In his last full budget, Jaitley also accepted key recommendations of the NK Singh Committee on fiscal discipline to reduce debt-to-GDP ratio to 40% by 2024-25 from 50.1% in 2017-18 and has introduced amendments to the present Fiscal Responsibility and Budget Management Act.
The government now aims to reduce its debt-to-GDP ratio to 48.8% in 2018-19, 46.7% in 2019-20 and 44.6% in 2020-21, while fiscal deficit as a percentage of GDP is targeted to be reduced to 3.3%, 3.1% and 3%, respectively during the same period.
The government also marginally increased its borrowing programme to Rs6.06 trillion for the next fiscal from Rs6.05 trillion in the current fiscal year.
With further deferment of the 3% fiscal deficit target, Jaitley has revised the fiscal consolidation glide path for three successive years.
While the budget estimate of fiscal deficit for 2017-18 was 3.2% of GDP, the revised estimate is now 3.5%, the same as 2016-17.
The government achieved the fiscal deficit target of 3.5% of GDP after cutting down capital expenditure by ~36,000 crore in 2017-18. A shortfall of ~50,000 crore on account of GST forced the government to revise its fiscal deficit target.
However, the more worrying aspect is that the government’s revenue deficit shot up to 2.6% of
NEW DELHI: GOVERNMENT ACCEPTED KEY RECOMMENDATIONS OF NK SINGH PANEL ON FISCAL DISCIPLINE TO REDUCE DEBTTOGDP RATIO FROM 49 TO 40% VIJAY RUPANI, Gujarat CM
GDP in 2017-18 from the budget estimate of 1.9% of GDP, showing signs of the deteriorating quality of fiscal consolidation. This is also due to ~1.1 trillion increase in revenue expenditure during the year.
Jaitley attributed the slippage to the government receiving GST revenue for 11 months in 2017-18 (a shortfall of Rs50,000 crore) and facing a shortfall in non-tax revenue due to lower receipts from spectrum auction.
Part of the shortfall was met through higher direct tax collections and disinvestment, Jaitley
RAVI SHANKAR PRASAD, IT minister
said. The government hopes to breach the disinvestment target in 2017-18 by collecting ~1 trillion against the budget estimate of Rs72,500 crore. For 2018-19, the government has set a disinvestment target of ~80,000 crore, including gains from privatisation of Air India Ltd.
The government has assumed GST collections will grow by 67% to Rs7.4 trillion in 2018-19 while it has targeted a humble 4% growth in non-tax revenues to Rs2.4 trillion after it failed to achieve the target in the previous year.
SANJAY JHA, Congress spokesperson