The government will take a “balanced” view on the fiscal deficit target for 2016-17 after taking into account the growth needs and market borrowing constraints, economic affairs secretary Shaktikanta Das said on Monday.
“The truth lies somewhere in the middle (the need to spend more and adhere to the fiscal consolidation roadmap). The government is in a position to know how much expenditure it can afford and how much borrowing it can afford. So, therefore, a balance is found,” Das told the finance ministry’s Youtube channel ahead of the Budget.
The Modi government has its task cut out for FY17 when it comes to meeting the fiscal targets. An additional Rs 1.1 lakh crore needed to be provided to meet the 7th Pay Commission obligations and the promised higher pension for armed forces. Also, the need to augment public capital spending to boost growth, given the stagnation in private investments, has made the fiscal situation challenging for the government to reduce the deficit to 3.5% of GDP in 2016-17 from 3.9% in the current fiscal.
The government has indicated the budgeted expenditure levels this fiscal would be met, thanks to more realistic revenue projections and reining in of the oil subsidy. Terming the projected 7.6% growth for FY16 as significant, Das said the government would try to present a growth-oriented budget.