Amid the rising concerns over fiscal slippage and alleged security issues of Aadhaar, Finance Minister Arun Jaitley on Thursday hit out at the opposition in the Rajya Sabha, saying that it was the Modi government that brought UPA’s Goods and Services Tax (GST) and Aadhaar to their logical conclusions. He further said that the fiscal slippage was on the back of higher crude oil prices and payments under the 7th Pay Commission, and not a major concern for the government.
Arun Jaitley also said that the subsidies payout via Direct Benefit Transfer helped the economy a great deal. Referring to Moody’s rating upgrade, Arun Jaitley said it was not an easy task as India was left as among the fragile five economies under the UPA government, with double-digit inflation and 4.6% fiscal deficit.
The continuous rise in crude oil prices is indeed becoming a cause of concern for the government.With low GST collections in November and December and fiscal deficit already breaching the 3.2% target, the rise in oil prices will put India in a vulnerable position. However, Arun Jaitley said that the Indian economy is facing challenges due to the global slowdown and structural changes like the GST.
The government is currently struggling on many fronts regarding the fiscal deficit. The government last week announced to borrow additional Rs 50,000 crore via gilts, which is double the amount that was estimated by the market, which could lead to “modest fiscal slippage”.
The government on Tuesday also announced to replace the 8% Savings Bonds Scheme with a 7.75% bond. In wake of lower tax collections and reduced RBI dividend, the government is eyeing to extend its disinvestment target to Rs 1 lakh crore as against the FY18 budget target of Rs 72,500 crore. However, experts say that the record foreign exchange reserves, for the next months, would be able to help India against the rise in crude oil prices.