Finance minister Arun Jaitley projected a fiscal deficit of 3.3% of the gross domestic product for 2018-’19, while presenting the Union Budget on Thursday.
Fiscal deficit is the difference between the government’s revenue and expenditure, and indicates how much the government may need to borrow. In 2017-’18, the fiscal deficit was Rs 5.95 lakh crore or 3.5% of the Gross Domestic Product, revised from the earlier estimate of 3.2%.
Jaitley said the government will accept the recommendations made by the Fiscal Reform and Budget Management Committee, to bring down its debt-to-GDP ratio to 40% from the current from 49.4%. This is to “impart unquestionable credibility to the government’s commitment for the revised fiscal glide path,” he said.
India’s fiscal deficit has been widening. By November 2017, the government had already exceeded its fiscal deficit target for the financial year. Its deficit in the April to November 2017 period was Rs 6.12 lakh crore, while the Budget 2017 estimate was Rs 5.46 lakh crore.
Chief Economic Adviser Arvind Subramanian’s Economic Survey 2018, which was tabled in Parliament on Monday, also called for a halt in the governments measures towards fiscal consolidation.