Former Finance Minister and Congress leader P Chidambaram today targeted the government over state of economy on the back of government’s intent to keep the fiscal deficit at 6.7 percent, same as the level in 2021-22
A day after the central government revised its fiscal deficit target for FY2023 and stated it will limit it to the current year’s numbers Senior Congress leader P Chidambaram criticised the government over the state of the Indian economy, asking if it was in the “pink of health” over high fiscal deficit, inflation, and the depreciating value of the rupee.
He also questioned the government for “backsliding on the fiscal deficit target for the current year”. The former finance minister tweeted: “Within months of setting the FD (fiscal deficit) target at 6.4 percent for 2022-23, the government is backsliding. Now, Government is saying it will ‘try to keep the FD at 6.7 percent, same as the level in 2021-22,”
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“High FD, high inflation, huge FPI outflows, depreciating rupee, depletion of forex reserves — what do they point to? Is the Indian economy in the pink of health,” he further questioned.
Mint had reported on Thursday that government will not be able to cut its budget deficit this fiscal year as previously projected and will seek to cap the shortfall at last year’s level to prevent a major deterioration in public finances.
It’s a clear indication of the government’s concerns around risks to its sovereign credit rating but will likely limit its firepower to contain inflation and provide relief to households and businesses.
In February, the central government had set a fiscal deficit target of 6.4% of gross domestic output (GDP) for the year that started on April 1, compared with a deficit of 6.7% last year.
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Meanwhile, Deutsche Bank’s chief economist Kaushik Das has said, centre can meet the fiscal deficit target of 6.4 per cent for 2022-23 if there are no further excise duty cuts, it lowers high oil prices and curtails additional spending on subsidies.
“…our analysis of the fiscal arithmetic at this juncture suggests that the central government can still potentially hold the FY23 fiscal deficit close to the target of 6.4 percent of GDP, assuming no further excise duty cuts or/and additional spending on subsidies over and above what has already been announced,” it said. The note said that the recent cuts in excise duties, coupled with the higher spending on fertiliser, food and fuel subsidies have led to “upside risks” on the fiscal deficit target. (Mint)
