Budget 2018: A day after the monetary policy committee flagged risks to inflation from a fiscal slippage, finance minister Arun Jaitley on Thursday said that Centre has been sticking to fiscal prudence ever since the NDA came to power and will continue to do so in the coming years. Replying to a debate on Budget 2018-19 in the Lok Sabha, Jaitley said the government has consistently reduced fiscal deficit from 4.5% of gross domestic product (GDP) in FY14 to the estimated 3.5% in the current fiscal.
The slippage of 30 basis points from the FY18 target of 3.2% was a statistical artefact that would have been bridged had the government factored in a full-year GST collection, instead of that of 11 months in the first year of its launch following the introduction of a new accounting system, he stressed.
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The government has set FY19 fiscal deficit target at 3.3% instead of 3% aimed earlier. Though the Finance Bill has set the FY20 target at 3.1%, economic affairs secretary SC Garg has said fiscal deficit can be contained at 3% in that fiscal.
Bond yields have risen roughly 75 basis points in the past two months over concerns of worsening fiscal deficit.
Without naming former Prime Minister Manmohan Singh, Jaitley said GDP growth is expected to drop only 0.4 percentage points in the current fiscal to 6.7% from a year before, and not two percentage points (as claimed by Singh after demonetisation).