The Finance Ministry announced that the government will cut down the earlier announced additional borrowing from Rs. 50000 crores to Rs. 20000 crores. Reduced borrowing target is a comfortable news for fiscal discipline. The decision to cut additional borrowings is due to better tax revenue collection in recent months.
Even with the reduced additional Rs. 15000 crores borrowings, government’s fiscal deficit target is expected to cross the budgetary figure of 3.2% of GDP.
On the disinvestment front, there is a reasonable level of success with actual disinvestment earnings of Rs. 54337 crores compared to the budgeted target of Rs. 72500 cores.
The center has to realize fiscal deficit target of 3% in the coming budget. But indications are that the figure may stay at around the 2017-18 target of 3.2% in the context of increased expenditure commitment created by slow GDP growth.
Backgrounder
Fiscal Deficit (FD) simply indicates government borrowing to run the budget. The central government is on a mission to reduce the FD to 3% of GDP as instructed by the FRBM to ensure better financial discipline. The NK Singh Committee on reviewing the FRBM also advices government to follow the path of fiscal prudence by reducing fiscal deficit to 3% of GDP. But low revenue from slow economic growth and higher expenditure commitments as the economy is slowing down. All these have tempted the government to go for additional borrowings.
