New Delhi: With growth concerns coming to the fore, the Narendra Modi government may overshoot its fiscal deficit target of 3.3 per cent of gross domestic product (GDP) in the current fiscal.
It is “critical to focus on growth first than maintaining fiscal prudence”, said a government official who did not wish to be identified.
The government is looking at how much space it has within the Fiscal Responsibility and Budget Management (FRBM) Act for a possible fiscal slippage, the official added.
The NK Singh committee on FRBM had proposed an escape clause wherein the fiscal deficit could be marginally relaxed by up to 50 basis points to bring in structural reforms.
The comment comes at a time tax collections have grown at a much slower pace than anticipated, as slowing growth has adversely impacted corporate earnings and turnover.
At the same time, the government is under pressure to take fiscal measures to boost consumption through cuts in income tax rates and other sops.
RBI estimate for full-year GDP growth is 5%
India’s GDP growth slowed to a six-year low of 4.5 per cent in July-September, falling for the sixth consecutive quarter. In the full year, the Reserve Bank of India has estimated that the Indian economy will grow at only 5 per cent as against a 6.8 per cent growth in the year-ago period.
Net direct tax collections in the April-November period were at Rs 5,56 lakh crore, only around 42 per cent of the full-year budgeted targets of Rs 13.35 lakh crore.
GST collections are faring marginally better but still short of targets.
Until November-end, the government had collected around Rs 3 lakh crore in central GST revenues, which was only 58 per cent of the budgeted full-year target of Rs 5.26 lakh crore.
Compensation cess, collected by the Union government and shared with the states, was at Rs 63,194 crore as of November-end, 58 per cent of the full-year target of Rs 1.09 lakh crore.