The government has utilised 'escape clause' under the FRBM Act, which allows the Centre to breach its fiscal deficit target by 0.5 percentage points at times of severe stress in the economy, including periods of structural change and when growth falls sharply.
Finance Minister Nirmala Sitharaman on Sunday said the 2020-21 union budget was prepared keeping the FRBM (Fiscal Responsibility and Budget Management) in mind even as she maintained she would be remembered for presenting the “longest prepared budget” than for “longest speech” on it. “So in a way all these (measures) and more has been done that the FRBM, as an Act, we have to keep in mind and also comply with it. So we have not really breached the FRBM. We have not gone outlandish on it.
“We have kept fiscal discipline, which is a USP for both the Atal Bihari Vajpayee government and also for the Shri Narendra Modi government,” she said. The Centre had earlier said it was committed to reducing fiscal deficit — the gap between total expenditure and revenue — to 3 per cent of Gross Domestic Product (GDP) by 2020-21 and eliminate the primary deficit as per the FRBM Act.
The government has utilised ‘escape clause’ under the FRBM Act, which allows the Centre to breach its fiscal deficit target by 0.5 percentage points at times of severe stress in the economy, including periods of structural change and when growth falls sharply.
The Union Budget earlier this month raised the fiscal deficit target to 3.8 per cent of the GDP for 2019-20, from the 3.3 per cent pegged earlier, due to revenue shortage. The Minister was addressing a gathering of industry representatives and trade here. Sitharaman said the budget was prepared between July last year and February this year, with inputs from all stakeholders, including various ministries.
“It was probably for the first time, many people do tell me, for the first time, this was the longest speech. I would rather be remembered in fact that it was the longest prepared budget between July and February,” she said. Replying to query, she said the government is trying to reduce the dependence of the pharma industry on API (Active Pharmaceutical Ingredient). “We were at one point of time dominant producers of API. Today we don’t any of them left. The government is of course is spending a lot of time on how best we can encourage production of the API…So some work is going on partly addressing the issue,” she said.
Sitharaman said the capital stressed MSMEs were offered additional terms loans through their respective banks and given them additional working capital. On GST, she said from April 1, a “simplified regime” will begin, also to ease the technical glitches if any. She asked the Central Board of Indirect Taxes and Customs to reach out people and clarify their doubts.
“I donot want any more doubts on GST. 1st of April onwards we are bringing a simplified compliance regime for the GST and that has already been final-tested. So GST glitches because of the system will be completely addressed,” she added.