On track to meet fiscal deficit target of 6.4%, says Finance Minister Sitharaman

Finance minister Nirmala Sitharaman Wednesday said the government is on course to meet the FY23 fiscal deficit target of 6.4% of GDP and asserted that there is no fear of stagflation.

Replying to the debate on the first batch of Supplementary Demands for Grants 2022-23 in Lok Sabha, the finance minister said the government is committed to the path of fiscal consolidation.

Sitharaman would present the budget for FY24 on February 1 next year along with revised estimates for the current fiscal.


India is the fastest growing economy and has lower inflation with a forbearance limit, she added.

The Supplementary Demands for Grants, authorising the government to spend an additional ₹3.25 lakh crore in FY23, was later passed in the house.

The finance minister said inflation has been declining since April 2022 and is now in the tolerable band of the RBI, she noted.

Prime Minister Narendra Modi and his group of ministers are constantly watching and making periodic interventions and taking measures to keep inflation under check to ensure that the poor do not have to bear the extra financial burden, she added.

Several supply-side measures have been taken by the government to address inflation, including reduction in excise duty by ₹8 per litre on petrol and ₹6 per litre on diesel on May 21, 2022, prohibition of export of wheat products, imposition of export duty on rice, and reduction in import duties, she said.

In addition, the government has imposed stock limits on edible oils and oil seeds, included soya meal as an essential commodity in the schedule of the Essential Commodities Act, 1955 and imposed a stock limit on soya meal.

"We will bring it (inflation) down further for the sake of common people," she said, pointing out that the issue was being raised by Congress during whose regime inflation was in double digits.

Responding to criticism about the repo rate hike by the Reserve Bank of India (RBI), Sitharaman said it has touched a high of 8% during UPA's time but it is 6.25% at the moment.

The finance minister said there is no fear of stagflation as far as India is concerned. Stagflation refers to a phenomenon when there is a slowdown in the economy amid high inflation.

On the declining value of the rupee against the US dollar, she said, "every report has told you that the Indian rupee has only strengthened against the dollar... we have performed much better than many other emerging market economies".

She said the INR, which has weakened about 6.9% against the US dollar in the current financial year till November 30, has fared better than other emerging market currencies such as Turkish lira (21.2%), South African rand (15.1%) and Brazilian real (8.7%) .

Citing a World Bank report, the finance minister said India's forex reserves are one of the highest in the world and this provides a cushion against global spillover.

India is less exposed to international trade flows, she said, adding from the report that India's external position has also improved considerably over the last decade.

Banking Sector

The finance minister noted that non-performing assets (NPAs) have come down drastically to 7.28% at the end of March 2022 due to various measures taken by the Modi government.

NPAs declined as a result of the government's 4Rs strategy of recognition, resolution, recapitalisation and reforms, she said.

Asset Quality Review (AQR) initiated in 2015 led to a surge in stressed accounts. It hit a peak of 14.58% and eased to 11.59% after that.