New Delhi: Government today said it is on course to meet the fiscal deficit target of 3.9 per cent of GDP for 2015-16, and 3.5 per cent next fiscal, despite pressure of additional outgo on account of the 7th Pay Commission and OROP. “We will absolutely meet our fiscal consolidation roadmap. We have said that the 3.9 per cent fiscal deficit target this year is well in hand.
“Next year we have said a fiscal deficit target of 3.5 per cent that took into account the impact of the 7th Pay Commission, One Rank One Pension (OROP), that was very much included in our modelling…,” Minister of State for Finance Jayant Sinha told reporters outside Parliament.
In the mid-year analysis tabled in Parliament, the government lowered the economic growth forecast for 2015-16 to 7-7.5 per cent from 8.1-8.5 per cent projected in February. It said slower-than-anticipated nominal GDP growth (8.2 per cent versus budget estimate of 11.5) will itself raise the deficit target by 0.2 per cent of GDP. The anticipated shortfall in disinvestment receipts, owing to adverse market conditions for a portfolio that largely comprises commodity stocks, will add to the challenge.
“But tax collections are buoyant,” it said. That plus the additional revenue measures like Swachh Bharat cess and increase in excise, will ensure that central government’s target will be met.
“As in FY2015, so too this year, the government’s commitment to meet announced fiscal targets is steadfast,” the review said. Sinha said the review document indicates that “fiscal performance and the economic performance” that the government has been able to demonstrate is “excellent”. Public investment and private consumption is driving economic growth, he added.
The roadmap for fiscal deficit of state and centre on consolidated level which is being followed “is quite encouraging”, he further said. Sinha said “we are seeing” significant private sector investment, and “it is just that it is in certain sectors and not in other sectors”.
Private investment in sectors like eCommerce, and renewable energy segments are good, he said, adding that there are two or three issues on which the government is working on regarding private investments.
Sinha said: “We are doing a lot on ease of doing business, which makes it even more compelling opportunity to make investments as far as private sector is concerned.
“So with all of those efforts under way, with our supply side reforms, we are quite sure the private sector investments cycle will turn up.”