'We Are Only In May': Finance Minister On Revising Fiscal Deficit Target

The Indian economy could contract by up to 5 per cent because of the coronavirus crisis.

New Delhi:

Finance Minister Nirmala Sitharaman on Sunday said the government will give out a new fiscal deficit target later as she announced the last batch of measures under the centre’s stimulus programme in response to the coronavirus crisis and the nationwide lockdown.

“We are only in May. February was the budget. April 1st was the new year. We have not even completed two full months of the new year. And we have also continuously kept showing what we are doing. So we will allow it for a bit later to talk about fiscal deficit,” she said in response to an NDTV question.

Most economists expect the government to miss its 3.5 per cent fiscal deficit target, mainly due to a sharp fall in revenue collection, with new estimates ranging from 5 per cent to even double. Fiscal deficit is the difference between the total revenue and expenditure of the government.

The Finance Ministry has said the government will miss the target announced in the budget but said it was being responsible given the current crisis.

“This money is going to keep people, companies afloat. Please focus on this. Obviously we are borrowing. I’m saying it is stressed. So those who are doing this debate now. Please look at where the money is going. We’re not splurging, we’re being responsible,” Ms Sitharaman said.

For the last five days, the Finance Minister has been giving details of the Rs 20 lakh crore economic package announced by Prime Minister Narendra Modi to deal with the fallout from the coronavirus pandemic.

A majority of the measures announced have been all about liquidity measures or regulation reforms with negligible extra budget spending.

The government has announced a variety of steps for small businesses, street vendors, farmers and poor migrants, but they have largely been either credit guarantee schemes or new fund creations to be shouldered by banks and financial institutions.

Economists and rating agencies expect the Indian economy could contract by up to 5 per cent in the current financial year beginning April, a steep fall from earlier government estimates of 6 per cent growth.

In April, the unemployment rate rose to 23.5 per cent from 8.7 per cent the previous month, data released by the Centre for Monitoring Indian Economy, a Mumbai-based think tank, showed.