Amid fiscal deficit for April-June of 2018 coming at $62.57 billion or 68.7 percent of the budgeted target for the current fiscal year, the finance ministry has said that the government will meet the fiscal deficit target for the current fiscal although there could be some slippages in the current account deficit (CAD) on account of high crude oil prices. The comfortable forex reserves built over the last three years will help the government deal with the volatility in oil prices in the international market. However, price fluctuation has come down significantly to a manageable level.
As per estimates, India’s CAD may widen to 2.5 percent of the gross domestic product due to higher oil prices -which has been accentuated by rupee depreciation. CAD, the difference between the inflow and outflow of foreign exchange, jumped to $48.7 billion, or 1.9 percent of GDP inFY18. This was higher than $14.4 billion, or 0.6 percent, in FY17. With regard to fiscal deficit, the government is committed to meeting the target of 3.3 percent in current financial year. In the Union Budget 2018-19, the government had revised the fiscal deficit target for 2017-18 to 3.5 percent from the earlier estimate of 3.2 percent. In absolute terms, the fiscal deficit had reached Rs 5.91 lakh crore, or 99.5 percent of the budget estimates.
On the revenue front, income tax collection has been robust, with E-way and Goods and Services Tax (GST) collection stabilising. Revenue collection under GST is well on track and could exceed the target. Also, the rate cut introduced recently will have minor impact on the revenue collection but that would be compensated by increased compliance and e-way bill. On disinvestment, the government will meet the disinvestment target of Rs 80,000 crore projected for the current fiscal. As far as inter-creditor agreement is concerned, it said that as many as 31 banks and financial institutions have signed this.