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Business News
RBI Governor says no reason to doubt govt will meet fiscal deficit targets
 
New Delhi, Feb 18 (PTI) Throwing his weight behind Finance Minister Nirmala Sitharaman's budget numbers, Reserve Bank Governor Shaktikanta Das has said that there is no reason to doubt that the government will be able to cut fiscal deficit to 3.5 per cent of the GDP in the fiscal beginning April 1.

In an interview with PTI, Das said the government has remained within the limits set by the Fiscal Responsibility and Budget Management (FRBM) Committee for the budget deficit.

The government missed deficit target for the third year in a row, pushing shortfall to 3.8 per cent of the GDP in the current fiscal as compared to 3.3 per cent previously planned. The fiscal deficit target for the coming fiscal year starting April 1, has been fixed at 3.5 per cent.

The fiscal deficit is the shortfall in a government's income compared with its spending. It essentially means that the government is spending beyond its means.

"With regard to the fiscal management of the government, the government has remained within the recommendations FRBM committee," Das said. "So, therefore, the excess fiscal deficit has been restricted to 0.5 per cent. The government has adhered to that and a large part of the financing of fiscal deficit next year will come from small savings."

The FRBM committee headed by N K Singh had recommended fiscal deficit to be cut to 2.8 per cent in 2020-21 fiscal and to 2.5 per cent by FY2023.

The panel had suggested an "escape clause" in case of overriding consideration of national security, acts of war, calamities of national proportion and collapse of agriculture severely affecting farm output and incomes. Under this, a deviation from the stipulated fiscal deficit target can be taken but not in excess of 0.5 percentage points in a year.

Das said there is no reason to doubt that the fiscal deficit for the next year would be met.

"There is no reason for anyone to doubt that number. The Budget has been presented just about a fortnight ago. There is no reason to disbelieve that number," he said.

The fiscal slippage announced in the government's new FY2021 budget is modest relative to its previous targets.

The RBI governor said the Budget for 2020-21 had announcements that certain bonds will be opened up for non-resident investment without any limit.

"Besides, an announcement has been made in Budget for raising limits for corporate bonds from 9 per cent to 15 per cent," he said. "So, therefore, there are a lot of foreign resources which are going to come into India. Indian corporates are also accessing a lot of money from foreign sources today through ECB."

The RBI, he said, will ensure that its borrowing programme is undertaken in a non-disruptive manner.

"So, as the debt manager of the government, the RBI will definitely try and ensure that the borrowing programme is undertaken in a non-disruptive manner," he said.

Sitharaman's second budget contains some measures which may support GDP growth in the medium-term, including reduced individual income tax rates, some easing of restrictions on foreign portfolio inflows, continued focus on public infrastructure spending, and schemes of which the details remain to be announced to encourage manufacturing in the electronics and textiles sectors.

Rating agencies have also backed the budget numbers. Fitch Ratings earlier this month said that the assumptions in the budget, including nominal growth of 10 per cent and a rise in revenues by 9.2 per cent were "broadly credible" although there were risks to the downside.

"In particular, reductions in the corporate tax rate, as previously announced, and new cuts in income tax rates are likely, in our view, to cause tax revenues to fall in the short run, before any potential medium-term benefits materialise; the divestment target appears optimistic, at over three times the estimated realisation in FY20," it had said.

The government in September last year cut the corporate tax rate to 22 per cent from 30 per cent and in the budget for 2020-21 announced reduction in personal income tax rates for those who were willing to give away present exemptions and rebates.

Indian economic growth plunged to an 11-year low in the July-September quarter when it clocked 4.5 per cent expansion.

"Greater fiscal transparency around off-budget financing is welcome, as the new budget now explicitly recognises borrowing from the National Small Savings Fund of 0.8 per cent of GDP in both FY20 and FY21, e g to finance food subsidies, although this is not incorporated in the headline figure (which would be 4.6 per cent of GDP in FY20 instead of 3.8 per cent)," Fitch had said.


Avolon cancels order for 75 Boeing 737 MAX planes
Stocks fall on Wall Street, heading for another weekly loss
Rupee slides 53 paise to settle above 76 mark amid meltdown in equities
Sensex plunges over 700 pts; Nifty drops below 8,400
Maruti reports 47 pc in March sales
Govt bans export of anti-malarial drug hydroxycloroquine
In worst ever market crash, Sensex tumbles about 4,000 pts as India goes into lockdown
Govt amends law to get powers to raise excise duty on petrol, diesel by Rs 8/litre in future
How RBI set up war-room in just one day amid coronavirus outbreak
LIC declares relaxation for premium payments
Covid-19: SBI opens emergency credit line for borrowers
Yes Bank: Jet Airways founder Naresh Goyal appears before ED
Sensex rallies over 1,800 pts; Nifty reclaims 8,700 level
Coronavirus impact may render 3.8 cr people jobless in tourism, hospitality sector
Asia stocks dive, dollar soars as ECB bazooka fails to ease fears
National Broadband Mission investment estimated at Rs 7 lakh cr: Prasad
Govt may cut rate on small savings schemes in next quarter
India must prepare for fighting coronavirus and economic slowdown: Rahul
FADA approaches SC for extension of sale, registration of BS-IV vehicles
Yes Bank resolution framework underway, depositors can withdraw money from Mar 18: Das
KERALA NEWS
Kerala has been successful in containing outbreak of COVID-19, claims CM
 Thiruvananthapuram: Kerala Chief Minister Pinarayi Vijayan on Friday said the State has been success  
Elderly couple cured of COVID-19, says Kerala CM
32 new cases in Kerala, Elderly couple cured of virus
Covid-19: Punishment by police in Kannur for violating lockdown turns into row
INTERNATIONAL NEWS
Trump recommends Americans wear face masks, but says he won't
 Washington, Apr 4 (PTI) President Donald Trump has recommended Americans to cover their faces with s
Indonesia covers up to protect orangutans from virus threat
Bangladesh sees highest single-day jump in coronavirus cases, extends shutdown to Apr 11
US wages all-out war to defeat "horrible" coronavirus: says Trump, as death toll crosses 5,000
NATIONAL NEWS
EC postpones elections to 11 UP Legislative Council seats amid lockdown
 Lucknow, Apr 4 (PTI) The Election Commission has postponed the elections to 11 Uttar Pradesh Legisla
Coronavirus: No community transmission in Goa, says CM
Madhya Pradesh: Two senior health officials test positive for Covid-19
43 more test positive for virus in Mumbai; death toll 19
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