Government committed to fiscal consolidation without compromising on expenditure

NEW DELHI: The government is committed to continue on the path of fiscal consolidation and the promotion of economic growth remains on top of its agenda, finance minister Nirmala Sitharaman said in her reply to the budget debate in the Lok Sabha.

“Keeping the fiscal deficit at 3.3% of GDP as against the 3.4% which was envisaged in the interim budget in the BE 2019-20, the government is committed to continue the path of fiscal consolidation,” Sitharaman said.

“So, there need not be any worries or anxieties that if we are really insisting on keeping the fiscal consolidation map, will the social sectors, will health and will education suffer — no, not at all,” she said.


This budget refers to the government’s commitment to substantially boost investment in agriculture and the social sector, she said, adding that the projections are realistic and adequately provide for items of expenditure such as defence expenditure, pension and salaries, internal security and other welfare programmes.

Government expenditure will increase by Rs 3.29 lakh crore in 2019-20 over the revised target in 2018-19. “To fully finance these expenditure commitments, necessary resource mobilisation from tax and non-tax sources has also been envisaged,” she said.

The minister said growth remains on top of the agenda. India’s GDP growth dropped to a five-year low of 6.8% in FY19. “Promotion of economic growth will be top of our agenda… to give focused attention to growth, the government has constituted a five-member cabinet committee on investment and growth chaired by PM himself,” Sitharaman said.

The government has set a target of becoming a $5 trillion economy and it is also taking very strong steps to promote growth and growth-incentivising investment, she added.

DATA DIFFERENCES
Sitharaman defended the data used in the budget, which varies from the more advanced data used in the Economic Survey 2018-19, saying it made the budget comparable with the interim budget and earlier budgets.

Nominal GDP for 2019-20 has been projected in the budget at growing 12% over the advanced nominal GDP estimate of Rs 188.4 lakh crore for 2018-19. “The advance estimates for 2018-19 were released on January 7, 2019, and the growth rate of nominal GDP for 2019-20 in the Economic Survey has been projected at 11% over the provisional nominal GDP estimate of Rs 190 lakh crore for 2018-19,” she said, adding that the provisional estimates were released on May 31, 2019.

Both are consistent with each other as each of them projects nominal GDP of Rs 211lakh crore for 2019-20. The difference in growth rates is because the 12% growth rate projected in the budget is on a lower GDP base for 2018-19. The lower GDP base of 2018-19 has been as used in the budget because the same figure was projected in the interim budget.