Hindustan Times (Jalandhar)

Fi­nance min­istry likely to as­sume 12% nom­i­nal GDP growth rate for 2018-19

- Asit Ran­jan Mishra asit.m@livemint.com

NEW DELHI: The fi­nance min­istry may as­sume a much higher nom­i­nal gross do­mes­tic prod­uct (GDP) growth rate—around 12%—for 2018-19, which may help it project a rosier fis­cal deficit num­ber in the bud­get to be pre­sented on 1 Fe­bru­ary.

The fig­ure com­pares with a nom­i­nal GDP growth rate of 9.5% es­ti­mated by the Cen­tral Statis­tics Of­fice (CSO) for 2017-18.

Nom­i­nal GDP, which is GDP eval­u­ated at cur­rent mar­ket prices and fac­tors in the ef­fect of in­fla­tion, is used as the base to cal­cu­late key fis­cal in­di­ca­tors such as the fis­cal deficit, rev­enue deficit and debt-to-GDP ra­tio that are used to gauge fis­cal health.

“Nom­i­nal GDP growth may be as­sumed close to 12% for 2018-19 in the bud­get. The Eco­nomic Sur­vey may project real GDP growth to be in the range of 6.75-7.75%,” a se­nior gov­ern­ment of­fi­cial said on condition of anonymity.

While the World Bank has es­ti­mated In­dia’s eco­nomic growth to ac­cel­er­ate to 7.3% in 2018-19, mak­ing it the fastest grow­ing ma­jor econ­omy, from 6.5% in the year end­ing 31 March, the In­ter­na­tional Mon­e­tary Fund ex­pects growth to pick up to 7.4% in the same pe­riod.

Fi­nance min­is­ter Arun Jait­ley as­sumed nom­i­nal GDP growth of 11.75% for the 2017-18 fis­cal year in his last bud­get. How­ever, es­ti­mates put out by the Cen­tral Statis­tics Of­fice showed nom­i­nal GDP may grow only by 9.5% dur­ing the year.

The lower-than-an­tic­i­pated nom­i­nal GDP growth will lead to “mar­ginal slip­page” in the fis­cal deficit tar­get for 2017-18—from 3.2% of GDP es­ti­mated in the bud­get to 3.29%—as­sum­ing the gov­ern­ment bor­rows what it bud­geted for the year, said T.C.A. Anant, chief statis­ti­cian of In­dia.

Since the gov­ern­ment has in­creased its spend­ing through sup­ple­men­tary de­mands for grants and has com­mu­ni­cated that it may bor­row ₹50,000 crore more by March 31, the ac­tual fis­cal slip­page could be more.

In­di­rect tax rev­enue has taken a hit as col­lec­tions un­der the goods and ser­vices tax (GST) have been less than an­tic­i­pated. This may also make it dif­fi­cult for the fi­nance min­is­ter to stick to his fis­cal con­sol­i­da­tion roadmap of bring­ing down the fis­cal deficit to 3% of GDP by 2018-19, com­mit­ted in last year’s bud­get. This will be the last full bud­get of the Na­tional Demo­cratic Al­liance gov­ern­ment be­fore the 2019 gen­eral elec­tion.

Newspapers in English

Newspapers from India