The government will stick to the 3.3 percent fiscal deficit target in the present financial year, Finance Minister Arun Jaitley said Friday. He also stated India will clock a growth rate of 7-8 percent despite global uncertainties and will retain the tag of the world’s fastest-growing major economy.
“Our ability to be within that 7-8 percent range is fairly certain though I watch comments to the contrary I am fairly certain. “Even in this year, despite all the odds, we will be able to maintain our fiscal aims because when current account deficits are impacted by oil prices and strengthening dollar, the last thing that India can afford is to run itself into a twin deficit situation because a fallout of that is very serious,” Jaitley said while pointing the annual general meeting of industry body FICCI here.
The government has budgeted to have a fiscal deficit at 3.3 percent of the GDP in the current fiscal, lower than 3.5 percent in 2017-18. As per the latest information, the fiscal deficit in the April-October period stood at 103.9 percent of budget estimates.
Jaitley said oil prices have a direct impact on India since the country is the main importer. India, he stated, has a particular resistance capacity to deal with rising crude oil prices and when it breaches the limit, it can impact inflation, currency and the present account deficit (CAD).
The CAD, which is the difference among the inflow and outflow of foreign exchange, widened to 2.9 percent of GDP in the July-September quarter from 2.4 percent of GDP in April-June.
“When the global problems stare us in the face, we want at least our internal domestic capacities be strengthened to put up our resistance. Indian economy is now fairly large for us to display a certain level of resilience notwithstanding the negative global trends, IMF forecast of a slight slowdown. We still maintain our position as the fastest amongst the major economies in terms of growth,” the minister said.
Pointing out the challenges to the economy, Jaitley said there is a need to get out of the “syndrome of difficulties in credit” and improve the liquidity situation in the market. The second problem is “even when the election year debate goes on, many like you (industry) will have to flag to different players in the political system the importance of sound policy and how much they can be blended with good politics”.
Jaitley stated India cannot afford to have fragile coalitions for stable policy decisions and continue on the path of reforms.”…You need a decisive leadership, you can’t have fragile coalitions because at the end of the day if one partner says I can pull down the government if you don’t declare my state as a special status, then those worse off can even say why not me? And you would have half a dozen wanting a special status,” he spoke.
He commented a coalition government would lead to a situation where the country probably will have a helpless Centre dependent on these kinds of players. “And what the founders of our nation envisaged that India, which is Bharat, which is a union of states, then ending up as a confederation of states and that is the last thing that India can afford. “If you required policy clarity, you will need policy and directional stability and you will need a decisive leadership which moves in that direction which will then make an economy which is fast growing with various market reforms,” Jaitley said.
The minister also said that under Ayushman Bharat scheme as many as 5 lakh poor people got free medical treatment in the last two-and-a-half months. Prime Minister Narendra Modi in September set up the Ayushman Bharat – Pradhan Mantri Jan Aarogya Yojana which aims to give a coverage of Rs. 5 lakh per family annually, benefiting more than 10.74 crore poor families for secondary and tertiary care hospitalization through a network of impaneled health care providers.