Finance minister Arun Jaitley on Tuesday expressed confidence on meeting the fiscal deficit target of 4.1% of GDP, pinning hopes on better tax collection in the last quarter and fund inflow from disinvestment and telecom spectrum sales. The government has already exceeded 98% of the gap between receipts and spending by November end.
Jaitley said at a function that his optimism stems from the turnaround signs the manufacturing sector is showing. “Even though revenue receipts has been challenging due to slow manufacturing industry, now it is turning around and it looks like we will be able to meet our fiscal targets,” he said.
Recent data showed that the manufacturing sector rebounded with 3.8% growth in November, recovering from its sharpest decline in five-and-a-half years recorded at 7.4% in October 2014.
Assuming no further spending cut is adopted by the government, restraining fiscal deficit to the original projection of Rs 5.31 lakh crore would heavily depend on disinvestment and other receipts. Official statistics showed that the fiscal deficit had already touched Rs 5.25 lakh crore by November end. While direct tax collection grew at 12.9% in the April December period, indirect tax receipts growth is far behind the 20% growth target set for the current year. Excise, customs and service tax collections grew just 6.7% during April-December.
Jaitley indicated that besides manufacturing, there are other positive signs too. “Our currency is one of those two global currencies that withstood the might of the US dollar. Most global currencies are under pressure,” he said. “From the depressing slowdown in the last last two three years, suddenly, our growth rates are likely to look up.”
The minister said that other competing economies globally have not been so good.
Jaitley also said the current account deficit is likely to look better. He added that the government is addressing two major concerns of investors — slow decisionmaking and lack of policy stability. “Both the PM and I were at pains to explain that we want an investor friendly tax administration and we are all working on this,” he said, adding that this was also a concern raised at the meeting of chief executives with PM Narendra Modi and US President Barack Obama on Monday. Jaitley, however, made it clear that no tax evader would be allowed to go scot-free.