Published: Sun, September 16, 2018
Economy | By

Govt will maintain 3.3% fiscal deficit target: Jaitley

Govt will maintain 3.3% fiscal deficit target: Jaitley

Jaitley said the prime minister expressed satisfaction over the macroeconomic data that came recently.

It feels that the country can not afford to have a twin deficit problem - a depreciating rupee and high crude import bill putting pressure on the country's current account deficit (CAD), and a fiscal slippage. However, till now finance ministry has resisted pressure to cut taxes on fuel.

A day after announcing a set of measures to boost short-term capital inflows into the country to rein in rupee depreciation and curb rising current account deficit (CAD), finance minister Arun Jaitley on Saturday sent a strong signal of fiscal prudence by committing to the fiscal deficit as well as capital expenditure targets. Department of Economic Affairs (DEA) gave a detailed presentation to PM Modi.

"And on basis of all these analyses, we are optimistic about our growth rate, our tax collection and certainly as far as fiscal deficit is concerned will strictly meet the 3.3 per cent target", he said. There is a phenomenal increase in assesses base.

With regards to Masala bonds, Jaitley said it has been chose to do away with the withholding tax on bonds issued till March 2019.

The government has targeted a 14.43 per cent increase in direct tax collections at Rs 11.5 trillion in 2018-19 against Rs 10.05 trillion the previous year.

On GST, he said the new indirect tax regime is settling down and "with the kind of pick up in consumption which has taken place, obviously will have an impact on GST collections in the future months".

While various commentaries have observed that the government might have to resort to capital expenditure cuts to contain the fiscal deficit, Jaitley said, "We have already spent about 44 per cent of the Budget Estimates till August 31 and we will end the year without any cut".

The Government not only assured on the fiscal deficit but also claimed that growth will be much better. "The inflation is broadly under control".

On Friday, the Minister outlined a slew of measures aimed at stemming a decline in the rupee - the worst-performing Asian currency this year.

On non-tax revenues, he added that the government was confident of maintaining the disinvestment target and may exceed it as well. Masala bonds will be exempted from withholding tax this financial year and Indian banks will be allowed to become market makers in masala bonds including by underwriting. However, the numbers released by the Controller General of Accounts (CGA) have revealed that direct tax collections grew by only 6.6 per cent during April-July.

Economic Affairs secretary Subhash Chandra Garg said, while it is hard to give a specific number, it should have an impact of $8-10 billion.

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