India aims to retain fiscal deficit target at 6.4% of GDP: Tarun Bajaj
In an exclusive chat, Revenue and DEA Secretary Tarun Bajaj has confimed a CNBCTV18 newsbreak that the government is sticking to 6.4% fiscal deficit target and is not looking at additional market borrowing
The government is sticking to the 6.4 percent fiscal deficit pencilled in the budget. In an exclusive chat, Revenue and DEA Secretary Tarun Bajaj has confirmed the CNBC-TV18 newsbreak and added that the government will be able to manage some increase in the deficit without resorting to additional market borrowing.
The rationale is that due to high inflation, the government can bank on higher than budgeted nominal GDP (gross domestic product) to absorb the additional expenditure to be incurred in this fiscal.
"The deficit quantum will be higher but in percentage terms the government will be on course to meet the 6.4 percent mark," a source had told the reporter at the time of first publishing the story.
The surge in both the inflation metrics (WPI and CPI) has already expanded nominal GDP in the last fiscal by an astonishing 19.5 percent.
The rationale
In the current fiscal, FM Nirmala Sitharaman's budget factors in an 11.1 percent expansion but with the wholesale price index (WPI) continuing to be in double digits and the consumer price index (CPI) following suit, the government expects the 11.1 percent assumption will be surpassed.
This, in turn, will help expand the assumed GDP base of Rs 258 lakh crore for this fiscal and thus help the government cushion higher subsidy payments.
The calculation
In fact, with last fiscal's nominal GDP expanding more than earlier estimates, the asking run rate to achieve this year's budget estimate now stands reduced to 9.3 percent against the 11.1 percent factored earlier.
The tax revenues are buoyant too but the excise cuts on petrol and diesel are likely to dent the final collections. However, the government is still expected to meet the budget target, if not exceed it.
The government has also pushed additional expenditure on food, fertiliser and LPG subsidies to the next session of Parliament when a nod will be taken for extra expenditure of an estimated Rs 2 lakh crore on these items.
(Edited by : Abhishek Jha)
First Published: Jul 26, 2022 4:46 PM IST
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