The government will meet the fiscal deficit target for the current fiscal although there could be some slippages in the current account deficit (CAD) because of high crude oil prices, a top finance ministry official said today. The comfortable forex reserve built up over the last three years will help the government deal with the volatility in oil prices in the international market, the official said. He said however that price fluctuation has come down significantly and reached to manageable level.
“CAD will not be as good as the last year but it will not be as bad as some of the estimates because oil prices have not gone to the level people at some point of time projected. It will be pretty much in the range that we have estimated. It could be 10 basis points here or there,” the official said, requesting anonymity.
The official did not disclose the CAD estimate for the current fiscal, 2018-19. As per estimates, India’s CAD may widen to 2.5 per cent of the GDP due to higher oil prices, a situation which has been accentuated by rupee depreciation. CAD, the difference between the inflow and outflow of foreign exchange, jumped to USD 48.7 billion, or 1.9 per cent of GDP in 2017-18. This was higher than USD 14.4 billion, or 0.6 per cent, in 2016-17.
On the rupee’s downward movement against the US dollar, the official said that there has been zero depreciation in the last four years. The rupee is more or less at 2013 level, he said, adding that there is no proposal to raise dollar through FCNR (B). With regard to fiscal deficit, the official said the government is committed to meeting the target of 3.3 per cent.
In the Union Budget 2018-19 presented in February, the government had revised the fiscal deficit target for 2017-18 to 3.5 per cent from the earlier estimate of 3.2 per cent. In absolute terms, the fiscal deficit was Rs 5.91 lakh crore, or 99.5 per cent, of the Budget estimates. On the revenue front, the official said that income tax collection has been robust, with E-way and GST collection stabilising.
Revenue collection under Goods and Services Tax (GST) is well on track and could exceed the target. He also said that the rate cut effected recently will have minor impact on the revenue collection but that would be compensated by increased compliance and E-way Bill. On disinvestment, he said, the government will meet the target of Rs 80,000 crore projected for the current fiscal. As far as inter-creditor agreement (ICA) is concerned, the official said as many as 31 banks and financial institutions have signed this.