We Might End Up 2018-19 With 3.3% Fiscal Deficit, Says DEA Secretary
Economic Affairs Secretary Subhash Chandra Garg Saturday exuded confidence that FY19 will end with a fiscal deficit of 3.3 percent of the GDP, marginally lower than the revised estimate of 3.4 percent for the year.
He also said the government has maintained the glide path towards achieving the fiscal deficit target of 3 percent by 2020-21 and eliminate primary deficit.
"Deviations which have happened in the last two years are very nominal. Secondly, these don't go beyond the trend of the glide path ... this year it was to be 3.3 per cent, it has been 3.4 percent which is lower than 3.5 per cent. We might actually end up the year with 3.3 percent and stick to budget estimate," he told PTI in a post-budget interview.
"So, the path leads to 3 percent by 2020-21. The adjustment required is 0.3 or 0.4 percent. I think we can credibly do it in 2020-21. I think we have no plans to revise it (Fiscal Responsibility and Budget Management Act)," he said.
As per the interim budget tabled in Parliament on Friday, the government has projected a fiscal deficit target of 3.4 percent of GDP for the next financial year 2019-20.
The government on Friday came out with a roadmap to reduce the fiscal deficit, the gap between total expenditure and revenue, to 3 percent of the GDP by 2020-21, and eliminate primary deficit.
Primary deficit refers to the deficit left after subtracting interest payments from the fiscal deficit.
In Budget Estimate 2018-19, the primary deficit was calculated at Rs 48,481 crore which is 0.3 percent of GDP. Primary deficit in Revised Estimate 2018-19 is expected to be Rs 46,828 crore which works out to be 0.2 percent of the GDP.
The document projects nil primary deficit for 2020-21 and 2021-22 financial years.
The reduction of the primary deficit is a positive sign as it shows reduced usage of borrowed funds to pay for existing liabilities, the document said.
It also said there has been a slight decrease in gross tax revenue estimates for 2018-19 to the tune of about Rs 23,067 crore, mainly on account of lesser than the anticipated collection of GST.
The government further said the gross tax revenue as a percent of GDP is expected to increase to 12.1 percent of GDP in 2019-20 and stabilise at that level in 2020-21 before climbing up to a level of 12.2 percent of GDP.