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
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.”