Arun Jaitley says confident of meeting fiscal deficit target

Lloyd Doyle
Сентября 16, 2018

A day after steps to contain the widening current account deficit (CAD) and check fall of the rupee were announced, Prime Minister Narendra Modi on Saturday continued his two-day review of the economy as he took stock of tax collections and macro-economic indicators in analysing performance of different wings of the finance ministry.

Experts said that the optimism on meeting tax target was well placed.

"... As far as capital expenditure is concerned, which is quite necessary for the purposes of maintaining high trajectory growth... already we have spent about 44% of the budgeted expenditure till August 31 and we'll end the year without any cuts and will maintain 100% capital expenditure", the Finance Minister said.

The government will stick to the fiscal deficit target of 3.3 percent this fiscal as it expects buoyant tax revenues and exceeding disinvestment target, Finance Minister Arun Jaitley said Saturday.

Finance Minister Arun Jaitley attends a seminar with state finance ministers on the Goods and Services Tax (GST) issues, in Srinagar May 18, 2017.

Economic Affairs secretary Subhash Chandra Garg said, while it is hard to give a specific number, it should have an impact of $8-10 billion.

The government has made a decision 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 government, in a meeting chaired by Prime Minister Narendra Modi, also chose to remove restrictions on external commercial borrowings, masala bonds to control the current account deficit, which slipped for the first time in six quarters in April-June.

On revenue collections, he said the impact of anti-black money measures, demonetisation and GST were now visible with "phenomenal" increase in tax base.

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Jaitley said there was a phenomenal increase in the assessee base.

A 71% increase in income tax return filers before the 31 August deadline this year of 5.42 crore compared to the number of filers in the same time a year ago hints at improved direct tax compliance.

The finance minister said that the GST is settling down and the pickup in consumption will have a positive impact on collection.

However, the Centre and state governments could not achieve the target of collecting Rs 1 trillion a month in FY19, except in the month of April, which was due to arrears paid. The government had in the budget projected direct tax collection of Rs 11.5 lakh crore for 2018-19 fiscal.

The government has collected Rs 92.19 billion from disinvestment receipt against the target of Rs 800 billion for FY19. "We are confident that between direct and indirect tax collections, the government will comfortably meet the target if not surpass it", he said.

However, the FM did not say if today's meeting discussed the recent spike in fuel prices. "Just the way we exceeded the target last year, we are confident of not only maintaining the disinvestment target this year but may perhaps be in excess", Jaitley said.

The Index of Industrial Production (IIP) grew at 6.6 per cent in July, even though it moderated from 6.8 per cent in June.

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