Fiscal deficit target deviation just Rs 3,000 cr, can be ignored: Subhash Chandra Garg

The interim Budget in its revised estimate for the current fiscal year puts the fiscal deficit target at 3.4% against the budgeted target of 3.3% of the gross domestic product (GDP). The government, however, says it has almost maintained the fiscal deficit target but for rounding off the figure. Terming the minor deviation of 0.02% as ignorable, Subhash Chandra Garg, economic affairs secretary in the finance ministry, in an interview with Anjul Tomar tells that the deviation from 3.34% to 3.36% means a difference of hardly Rs 3,000 crore.

The government has missed the fiscal deficit goal for the second year in a row in 2018-19. What do you have to say?

There was a small deviation in meeting the fiscal deficit goal last year and still a negligible one this year. Last year, it was a 0.3% deviation from 3.2% to 3.5% of the GDP. That was no upward movement. This fiscal year too, there is a minor deviation from 3.34% to 3.36%. The fiscal deficit target is only going up by 0.02% that means around Rs 3,000 crore. This is hardly any deviation and, therefore, completely ignorable. We have reduced the borrowings this year in comparison to the Budget Estimate (BE) by as much as Rs 1.60 lakh crore by not doing the buyback by shifting some of the borrowings to be met from National Small Savings Fund (NSSF). So, there is a substantial reduction in borrowing. The gross borrowing programme is Rs 5 lakh crore plus now.

Do you think the fiscal deficit for this year could climb if the ambitious revised Budget numbers don’t materialise given that the disinvestment and tax collection targets are yet to be achieved?

We don’t expect it to be the case. The disinvestment and tax collection targets are going to be met.

What kind of impact will the latest revised GDP data projections have on the fiscal deficit numbers?

There would be some marginal positive impact of the revised GDP data on the fiscal deficit. But, we need to do the calculations. We will have to wait for the data to be factored in.

The government has allocated Rs 75,000 crore for the farmer income support scheme for the next financial year. Is it proper? How can you tie the hands of the next government?

The governments are supposed to present the annual financial statement for the next year in a Budget. We have also done that. We always estimate the expenditure and the revenue receipts for the next year and calculate what might be the borrowing requirement. So, the estimates are prepared for the entire year, which has been done. The demands for expenditure taken through the vote on account and also through the Appropriation Bill has again been proposed for four months. It’s not tying the hands. As far as major announcements go, they relate to the current year and not the next year. The two schemes-Pradhan Mantri-Kisan Samman Nidhi and PM Shram-Yogi Maandhan Yojana -will be implemented with effect from the current year itself. So, there is nothing wrong in doing that.

What if the next government doesn’t want to carry on the schemes announced by the outgoing government?

The new government will have another opportunity in July to get the entire expenditure planned when a regular Budget is presented. That time, if there is a feeling that any scheme, including PM-Kisan, is underprovided or over provided for, the allocation may be increased or decreased accordingly. But that call would be taken at that moment. Right now, what has been anticipated to be the likely expenditure has been provided for. And there is no convention as such about the government making nor not making big announcements in the Interim Budget.

What about increasing the annual tax exemption limit beyond Rs 5 lakh for individual taxpayers? Is that all or do you expect more in the full Budget?

It is for the next government to decide on extending the benefit to other slabs. Legally speaking, a new government can reverse the decision on Rs 5 lakh slab. But whether the government would do is another matter. Why should it be done at all given that it is a good measure meant for helping lower middle class which needs some money for consumption. The sum of Rs 5 lakh is considered as the level of income which should not be taxed by the government. The rationale behind it is that the government should tax the surplus income of relatively nouveau rich or relatively better off.

The latest GDP revised data shows that the country’s economy grew despite demonetisation and GST. What do you say on the revised GDP numbers?

The Central Statistics Organisation (CSO) will explain it. However, my sense is that it is data-driven and, therefore, if something is based on genuine data, this kind of growth should be accepted. It is coming in the area of financial services and also construction, which appears to have gone up at that time. So, let’s take it to be credible.

Are you expecting Rs 28,000 crore more as a dividend from Reserve Bank of India (RBI)?

In the Interim Budget, we have provided for Rs 58,000 crore. Of this, Rs 40,000 crore has already come. The decision on the remaining amount will be of the RBI Board depending on how much profit is there.

The Interim Budget gives a push to consumption rather than investment. The capital investment is proposed to go up by only 6% in 2019-20 as against a 20% increase this year. What do you have to say about this?

The capital investment is going up by 6% and consumption by 15-16%. While the capital expenditure also gives rise to consumption in a way in the year it takes place, it also adds to the growth. There is a slight shift but that is not too material. Capital investment programme remains reasonably strong. There is still positive growth in the capital expenditure programme. The inflation is low at 3-4%. Farmer schemes have added a little more towards the revenue side which should give a welcome rise to consumption. That is what is driving our growth.