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Govt committed to keep fiscal deficit within budgetary target, says Jaitley

Govt committed to keep fiscal deficit within budgetary target, says Jaitley

"The inflation is broadly under control". The development came after the meeting last evening where Prime Minister Narendra Modi reviewed the economic situation with top Finance Ministry and Reserve Bank of India officials. This comment appears to be reply to some experts who fear that the fiscal deficit will be higher than the budget target as deficit (difference between income and the expenditure of the Government) for the first four months (April-July) of the current fiscal has already exceeded 86.5 per cent.

With regards to Masala bonds, Jaitley said it has been made a decision to do away with the withholding tax on bonds issued till March 2019.

The government has chose to withdraw withholding tax on Masala bonds, allow some breathing space to foreign portfolio investments, and check non-essential imports and promote exports in order to arrest the decline in rupee and check the widening current account deficit. "The Central Board of Direct Taxes (CBDT) is very clear that this year we will be able to collect in excess of the budgeted target", said Jaitley. Jaitley said the government gives importance to fiscal deficit and expressed hope it would be contained. More issues will be discussed in the meeting with the Prime Minister, Jaitley said.

However, the FM did not say if today's meeting discussed the recent spike in fuel prices. In a Facebook post in June, Jaitley had said demands of huge cuts in fuel prices by opposition parties could lead India into a debt trap.

Nearly half of the retail selling price of petrol and diesel is made up of central and state taxes.




In a message clearly aimed at allaying market concerns that a confluence of factors could derail the Indian economy, Arun Jaitley said on Saturday the government is sure of meeting the fiscal deficit target given robust tax collections.

The steps include removal of withholding tax on rupee-denominated bonds known as Masala bonds issued till March next year, relaxation for Foreign Portfolio Investment (FPI), and curbs on non-essential imports.

At Saturday's meeting detailed presentations were made by Departments of Economic Affairs, Revenue, Expenditure and Disinvestment. Jaitley said the PM expressed satisfaction with the health of the economy and the macroeconomic data which had emerged so far.

The government had in Budget projected direct tax collection of Rs 11.5 lakh crore for 2018-19 fiscal. And even though we had a stiff target for direct tax collection, we can now see the impact of all the anti-black money measures which we had taken, like demonetisation and the GST. There is a phenomenal increase in assesses base. "Pick up in consumption will have impact on GST collections".


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