Have no reason to doubt govt commitment on fiscal targets: RBI

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Mumbai | Updated: October 5, 2019 9:43:04 AM

Last month, the finance minister had announced tax cuts for corporates by 10-12 percent to 25.17 percent, involving a revenue loss of Rs 1.45 lakh crore this fiscal.

Monetary policy, RBI cuts repo rate, tax collections, corporation tax, Shaktikanta Das, fiscal deficit, Credit Suisse, indirect tax collections, rbi Governor, Governor Shaktikanta Das, deficit target india, GST collectionThe budget has set fiscal deficit target at 3.3 percent for the current fiscal

Governor Shaktikanta Das on Friday said the Reserve Bank has no reason to doubt the government commitment to meet the fiscal deficit target this fiscal despite the massive tax giveaways of Rs 1.45 lakh and falling indirect tax collections.

The budget has set fiscal deficit target at 3.3 percent for the current fiscal but the steeply falling GST collection and the historic cut in corporate taxes have raised concerns over the possibility of meeting the target. Many analysts are of the view that the government will miss the target by a wide margin of 70-80 bps.

“The government has made a statement that they will adhere to the fiscal deficit target. Therefore, we have no reason to doubt the commitment to maintain the numbers as given in the budget,” Das told reporters after announcing the fourth bi-monthly monetary policy where the central bank lowered the rate by 25 bps to 5.15 percent–the fifth in 2019.

He said the government has several sources of revenue to meet the fiscal target. “So whatever short fall is expected because of corporate tax rate cuts, the government has the option of increasing or making it up from other sources”.

Last month, the finance minister had announced tax cuts for corporates by 10-12 percent to 25.17 percent, involving a revenue loss of Rs 1.45 lakh crore this fiscal.

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