Fis­cal Deficit on Re­cov­ery Path, Says Ashok Lavasa

Fig­ure at around 90% of the bud­get es­ti­mate at end of Septem­ber from 96.1% at Aug-end

The Economic Times - - Economy: Macro, Micro & More -

Deepshikha Sikar­war & Vi­nay Pandey

New Delhi: In­dia’s fis­cal deficit, which widened to a record in Au­gust, has started to im­prove and the gov­ern­ment is not yet wor­ried by crude oil prices that have climbed above $60 a bar­rel.

The fis­cal deficit eased to about 90% of the bud­get es­ti­mate for the full year at the end of Septem­ber from the level of 96.1% at the end of Au­gust, fi­nance sec­re­tary Ashok Lavasa told ET. Lavasa is also ex­pen­di­ture sec­re­tary.

“When you com­pare the fis­cal deficit num­ber till Au­gust with the fis­cal deficit num­ber till Septem­ber, you find that al­ready there is an im­prove­ment,” Lavasa said, dis­miss­ing wor­ries on this as­pect, while point­ing to the dif­fer­ence in rev­enue and ex­pen­di­ture trends. “When you look at the pace of rev­enue, there also you are not see­ing any short­fall com­pared to last year. The flow of rev­enue stream has a steady course which can­not be eas­ily changed by the de­part­ments which earn rev­enue,” he said.

In con­trast, the pace of ex­pen­di­ture de­pends on pace of im­ple- men­ta­tion. “Be­cause you had an early ap­proval of the bud­get, the pace of ex­pen­di­ture has ac­cel­er­ated,” he said.

“The rev­enue stream will start catch­ing up and that is when we will move towards achiev­ing the bal­ance,” he said, rul­ing out any im­me­di­ate re­view of the fis­cal tar­get of 3.2% of GDP for the fi­nan­cial year.

“As of now, we are not look­ing at any re­lax­ation… the gov­ern­ment has very clearly stated we would like to re­main within the bound­aries which we have set for our­selves,” Lavasa said. The gov­ern­ment com­pleted about 54% of the bud­geted spend­ing for the year by the end of Septem­ber. Some ex­ter­nal ex­perts have said the gov­ern­ment will over­shoot its deficit tar­get for the year, while oth­ers have called for a de­lib­er­ate re­lax­ation to boost the econ­omy, which grew at a three-year low of 5.7% in April-June. The NK Singh com­mit­tee set up to re­view the fis­cal con­sol­i­da­tion road map has al­lowed for re­lax­ation of fis­cal tar­gets in some sit­u­a­tions. “That is be­ing ex­am­ined. It is well known that they have given clauses for de­vi­a­tion, road map to re­turn, but that will be only taken once a fi­nal view is taken on the NK Singh com­mit­tee,” Lavasa said.

He said Brent crude oil prices, which crossed $60 a bar­rel, were not yet a worry.

“For a coun­try like In­dia, which is 80% im­port-de­pen­dent, crude oil prices are al­ways sig­nif­i­cant but there is a range within which things can move with­out caus­ing too much of ef­fect,” he said. “As of now, we feel that we are within that range.”

On ex­pec­ta­tions that rev­enue from spec­trum auc­tions is likely to fall short of tar­get, he said ev­ery year there are some an­tic­i­pated in­come schemes that don’t ma­te­ri­alise and some­thing else will prob­a­bly make up for that.

“I am not too wor­ried about one seg­ment not yield­ing the kind of rev­enues we were ex­pect­ing, but the big­ger ones – the di­rect taxes and indi­rect taxes – I think they will have to per­form,” he said, adding that so far things are on course ex­cept for a lit­tle un­cer­tainty on the goods and ser­vices tax.

On the is­sue of changes of GST, he said there was scope for ra­tio­nal­i­sa­tion. “The sim­pli­fi­ca­tion of pro­ce­dures, I think, is an on­go­ing ex­er­cise which will con­tinue. The re­clas­si­fi­ca­tion of rates, etc., that is a call that has to be taken by the GST Coun­cil.”

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