FM sticks to fiscal plan, hikes planned expenditure

RSTV Bureau

budget2While presenting the budget for 2016-17, Finance Minister Arun Jaitley stuck to the fiscal consolidation roadmap and proposed to keep the deficit at 3.5 per cent of GDP in 2016-17.

The fiscal deficit in current fiscal has been estimated at 3.9 per cent, which will be brought down to 3.5 per cent in next fiscal.

As per the deficit roadmap announced by Jaitley in the last budget, fiscal deficit was to be brought down to 3.9 per cent in current fiscal and further to 3.5 per cent by 2016-17. The deficit was to be lowered to 3 per cent by 2017-18.

He also assured the country that development agenda will not be compromised and a committee will be set up to review the working of Fiscal Resposibility and Budget Management (FRBM).

“While doing this I have ensured that development agenda has not been compromised,” said Jaitley in his budget speech.

The total government expenditure in the next fiscal will be Rs 19.78 lakh crore. Of this, Rs 5.50 lakh crore will go towards ‘Planned Expenditure’ and another Rs 14.28 lakh crore will be allocated towards ‘Non-Planned Expenditure’.

The revenue deficit for the current fiscal has been improved to 2.5 per cent of GDP, from the budgeted 2.8 per cent.

Jaitley also factored in thr uncertainty and volatility in the global markets and said that it was time to review the FRBM Act.

A committee to review the implementation of FRBM will be set up, he said. He also added that the government will work with the state governments towards doing away with the distinction between plan and non-planned expenditure.

Last year, Jaitley had delayed the fiscal consolidation roadmap in order to build infrastructure by boosting public investment.

The Economic Survey tabled in Parliament on Friday had said that “credibility and optimality” argued in favour of sticking to deficit target of 3.5 per cent of GDP for 2016-17, indicating some room for an upward revision.

“There are very good arguments for a strategy of aggressive fiscal consolidation…and equally good arguments for a strategy of moderate consolidation that can place the debt on a sustainable path while avoiding imparting a major negative demand shock to a still-fragile recovery,” the survey had said.

(With inputs from PTI)