Budget Series: Fiscal Management

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The Finance minister has set the fiscal deficit target for 2018-19 at 3.3% of the gross domestic product (GDP) against the earlier target of 3%.Most analysts say they had expected it to be 3.2%.The government also revised the deficit target for the year ending in March 2018 to 3.5% of GDP from the targeted 3.2%.
Key recommendations of N.k singh Committee are accepted by finance minister to reduce debt-to- GDP ratio to 40% by 2024 to 2025. The debt-to-GDP ratio was 50.1 % in last year. Now government aims to reduce the ratio by 3.3% in 2018-19 , by 3.1% in 2019-2020 and 3% by 2020-21.
In this budget Government has also introduced amendments to the present fiscal Responsibility and Budget Management Act.
The government has increased its borrowing programme from Rs6.05 trillion to Rs6.06 trillion for the next fiscal year.The fiscal deficit target of 3.5% of GDP was achieved after cutting down capital expenditure by Rs36,000 crore in 2017-18. A shortfall of Rs50,000 crore on account of the goods and services tax (GST) forced the government to revise its fiscal deficit target.
The government’s revenue deficit went up to 2.6% of GDP in 2017-18 from the budget estimate of 1.9% of GDP, because of Rs1.1 trillion increase in revenue expenditure during the year.
Finance minister said this due to the government receiving GST revenue for 11 months in 2017-18 (a shortfall of Rs50,000 crore) and facing a shortfall in non-tax revenue due to lower receipts from spectrum auction.
Part of the shortfall was met through higher direct tax collections and disinvestment, Jaitley said. The government hopes to breach the disinvestment target in 2017-18 by collecting Rs1 trillion against the budget estimate of Rs72,500 crore. For 2018-19, the government has set a disinvestment target of Rs80,000 crore, including gains from privatization of Air India Ltd.
The government hopes GST collections will grow by 67% to Rs7.4 trillion in 2018-19, where as it has targeted a 4% growth in non-tax revenues to Rs2.4 trillion after it failed to achieve the target in the previous year.
Source :http://www.livemint.com/…/Fiscal-deficit-goal-revised-to-bo…


CREDITS : MANSI
                 BHAVYA DUREJA

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