New Delhi, Feb 1 (IANS) Finance Minister Piyush Goyal on Friday said the government will miss the fiscal deficit target for the current and coming financial years but will maintain the glide path and achieve 3 per cent fiscal deficit target by 2020-21.
Goyal said the slippage in deficit targets for 2018-19 and 2019-20 by 10 and 30 basis points respectively to 3.4 per cent of the GDP is due to the new income support of Rs 6,000 a year for small and marginal farmers announced by him in the Interim Budget.
“The estimate of incomes and expenditure which I am presenting pegs the fiscal deficit of year 2019-20 at 3.4 per cent of GDP. We would have maintained fiscal deficit at 3.3 per cent for 2018-19 and taken further steps to consolidate fiscal deficit in 2019-20.
“However, considering the need for income support to farmers we have provided Rs 20,000 crore in 2018-19 RE (revised estimate) and Rs 75,000 crore in 2019-20 BE (budget estimate). If we exclude this, the fiscal deficit would have been less than 3.3 per cent for 2018-19 and less than 3.1 per cent for 2019-20,” Goyal said while presenting the budget.
The budget came out with a direct income support of Rs 6,000 per annum for small farmers with land-holding size up to two hectares which would be transferred directly into their bank accounts. The scheme is likely to directly benefit 12 crore farmer families.
“From the high of almost 6 per cent seven years ago, the fiscal deficit has been brought down to 3.4 per cent in 2018-19 RE… We have maintained the glide path towards our target of 3 per cent of fiscal deficit to be achieved by 2020-21,” he said.
Suggesting that the government will now focus on debt consolidation, he said India’s Debt to GDP ratio was 46.5 per cent in 2017-18. The Fiscal Responsibility and Budget Management (FRBM) Act, 2003 prescribes that the ratio should fall to 40 per cent by 2024-25.
Further, Goyal said the current account deficit (CAD), against a high of 5.6 per cent six years ago, is likely to be 2.5 per cent of GDP this year.
Citing revised GDP numbers for 2017-18 and 2016-17 released by the government on Thursday, the Minister said “the fiscal roadmap may not change very much” given the new numbers that are coiming out and the calculations that are getting more robust.
“When it comes to the farmers, I am sure everyone will appreciate that our farmers are our ‘Anna Daata’.”
Economic Affairs Secretary Subhash Chandra Garg said the gross borrwowings remain lower than the budgeted target but the net borrowings have increased by Rs 32,000 crore partly to pay for increased fiscal deficit and partly to build cash balance.
“There will be two more additional auctions for raising this amount,” he said.