Monday, 22 October, 2018

Arun Jaitley says confident of meeting fiscal deficit target

Finance minister Arun Jaitley Finance minister Arun Jaitley
Ginger Lawrence | 16 September, 2018, 14:18

Finance ministry officials on Saturday apprised Prime Minister Narendra Modi of the "comfortable" revenue position, which they said would help contain the fiscal deficit at the targeted 3.3 per cent of gross domestic product (GDP) in 2018-19, without resorting to any squeeze on the capital expenditure. The government has set a target of raising Rs 80,000 crore from disinvestment in state run companies in the current financial year.

Rating agency Moody's, however, earlier this month in a note said government is unlikely to meet the fiscal deficit target due to higher than budgeted oil prices and rising interest rate scenario. "We will maintain the 100 per cent capital expenditure because that is extremely necessary for maintaining the growth rate".

The finance minister also said that income tax collections will exceed budgetary targets; and that the GST regime is settling down.

With regards to Masala bonds, Jaitley said it has been made a decision to do away with the withholding tax on bonds issued till March 2019. "We are confident that between direct and indirect tax collections, the government will comfortably meet the target if not surpass it", he said.

"So far, the government has spent 44% of the budgeted capital expenditure till 31 August and there will be no cuts in capex by the end of this year", Jaitley said. The BJP leader also said the inflation was broadly under control. "I think it should have an impact of $8-10 billion", he was quoted as saying by PTI.

Asked if fuel prices and duty cuts were discussed, he said the meeting today was internal review meeting. "The Central Board of Direct Taxes (CBDT) is very clear that this year we will be able to collect in excess of the budgeted target", said Jaitley.

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"The primary focus of yesterday's discussions was with regard to current account deficit and how to narrow it down and possible steps with that regard". The fuel hike has led petrol touching a record high of Rs 81.63 per litre and diesel to Rs 73.54 a litre.

At Saturday's meeting, the second in two days, the Prime Minister reviewed the economic situation. Jaitley said the PM expressed satisfaction with the health of the economy and the macroeconomic data which had emerged so far.

Continuing briefing the media, FM Jaitley invoked the demonetisation issue and said that it has impacted the economy as it was an anti-black money measure.

"There is a phenomenal increase in the quantum of advance tax which has been paid".

The government had in Budget projected direct tax collection of Rs 11.5 lakh crore for 2018-19 fiscal. "With the kind of pickup in consumption which has taken place, it will have an impact on GST collection in future months".