Prior to the general elections, the biggest challenge before the central government engaged in the preparation of the interim budget is to prepare a report card for the exercise of handling financial losses during the last five years. The central government has failed to achieve the target of fiscal deficit last year, and during the current year 2018-19, it is also increasing to fail to achieve the target of 3.3 percent fiscal deficit target.
Failure in the current year is certain because the Central Government has not been able to meet the direct tax collections and the GST earning center's expectations. After these two failures, the government only avoids the shortcut to avoid red marks in the report card. According to the former finance minister and Congress leader P. Chidambaram, the central government can now bring the green signal to the financial statistics of the loss either with the support of the GST compensation reserve or the interim dividend of Rs 23 thousand crores from the Reserve Bank.
According to Anshuman Tiwari, Editor of INDIA TODAY, so that the fiscal deficit can be increased by 3.3 percent of the GDP during the financial year 2019-20, in the central budget, in the interim budget, where the revenue can be exposed, it can work to hide its expenditure. is. Tewari said that the Central Government has worked on the previous three occasions to show about 600 BPS (Basis Point) revenue and 400 BPS less expenditure. Now it can be 3.5 percent.
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Significantly, in May 2014, the Modi government, which was formed under the leadership of Bharatiya Janata Party, received huge relief on the official exchequer as a fall in crude oil prices. With this relief, the central government has made it easier to control financial losses. At the same time, the government also got an opportunity to strengthen its economic programs through this big savings.
But at the beginning of the term, the Modi Government, who succeeded in assuming the deficit, was stuck on its own expenditure, so that he had to go ahead with the target of the deficit in the budget.
The Central Government passed the Fiscal Responsibility and Budget Management Act in 2003, which works to determine the target of fiscal deficit for it. Although the governments fail to maintain the balance of expenditure and deficit, they have been altering the deficit target under this Act.
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The existing Central Government also constituted a Review Committee under the chairmanship of NK Singh in 2016 to revise the existing Act, which would increase the target. However, this committee set a target of fiscal deficit by 3 percent of GDP till March 31, 2020, and set it to 2.8 percent for 2020-21 and 2.5 percent by 2023.
While explaining the target of fiscal deficit set by this committee, Finance Minister Arun Jaitley has set a target of 3.2% fiscal deficit in Budget 2017. The central government has also been criticized for this decision and according to the figures, in 2018, the government did not even come out on this target of fiscal deficit. The central government has cited many reasons for this, which is important in terms of revenue from GST and rising prices of crude oil once again. At the same time, in view of the general elections during the current year, the central government is also expected to spend populist spending.
Last year, in the budget speech of 2018-19, the Finance Minister claimed to restrain the fiscal deficit. Jaitley said that during his tenure, the deficit has been reduced from 4.4 percent in 2013-14 to 3.5 percent from 2017-18. For the next financial year 2018-19, the government has set a target of 3.3 percent fiscal deficit target.
