New Delhi: Economic Affairs Secretary Subhash Chandra Garg on Saturday exuded confidence that FY2018-19 will end with a fiscal deficit of 3.3 per cent of the GDP, marginally lower than the revised estimate of 3.4 per cent for the year. He also said the government has maintained the glide path towards achieving the fiscal deficit target of 3 per cent 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 per cent which is lower than 3.5 per cent. We might actually end up the year with 3.3 per cent and stick to Budget Estimate," he told PTI in post Budget interview. "So, the path leads to 3 per cent by 2020-21. The adjustment required is 0.3 or 0.4 per cent. 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 for the next financial year 2019-20. The government Friday came out with a roadmap to reduce the fiscal deficit, the gap between total expenditure and revenue, to 3 per cent 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 (BE) 2018-19, the primary deficit was calculated at Rs 48,481 crore which is 0.3 per cent of GDP. Primary deficit in Revised Estimate (RE) 2018-19 is expected to be Rs 46,828 crore which works out to be 0.2 per cent 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 per cent of GDP is expected to increase to 12.1 per cent of GDP in 2019-20 and stabilise at that level in 2020-21 before climbing up to a level of 12.2 per cent of GDP.