New Delhi, October 17: With former Prime Minister Dr Manmohan Singh hitting back at the Union Finance Minister Nirmala Sitharaman stating the government "is obsessed with trying to fix blame on its opponents" instead of finding solutions, reports are arriving that India is most likely to miss its fiscal deficit target of 3.3 percent of gross domestic product (GDP) for the current Financial Year (FY 2019-20) by 30-50 basis points. Stating the reason for these claims, sources say that sharp slowdown in the economy that has severely crimped tax collection goals.
According to a report, published in the global news agency Reuters, the Narendra Modi government is mulling to cap the fiscal deficit for FY 19-20 at 3.8 percent of GDP, from the target that was set during the Union Budget on July 2019. Officials state that discussions on lowering the fiscal deficit to 3 percent of GDP by a year to 2021 are also on the cards. However, the details are yet to be made public. Dr Manmohan Singh Hits Back at Nirmala Sitharaman For Blaming Him For Bank Crisis, Seeks PM Narendra Modi's Intervention in PMC Bank Matter.
Earlier, Finance Minister Nirmala Sitharaman in September slashed the corporate tax, hoping that the economic growth from its 5 percent level in the April-June would improve. Also, several other measures were taken by the Union Finance Ministry like changes in the income tax slab, GST rates of certain products, bank mergers and loan melas. Inspite of all this, the situation of the country has not shown revival as it should have.
Considering the fact that Nobel Laureate Abhijit Banerjee stated that said the Indian banking sector is facing a deep-rooted crisis that requires immediate attention, Union government's approach towards reviving the Indian economy is a concerning factor for the corporates. Banerjee even opined that Reserve Bank of India should be more vigilant, else the recent crisis in the banking sector would deepen in the coming times. Nirmala Sitharaman Asks MSMEs to Respond by Oct 22 if They Would Provide Bill Discounts to Corporates Who Owe Them Rs 40,000 Crore.
Report of the Union government writing off Rs 2.75 lakh crore for entities that borrowed Rs 100 crore or more from scheduled commercial banks is another issue that is gaining momentum these days. With the presence of 980 such borrowers in the RBI list, having their debts written off is what the economists are worried about.
Apart from Banerjee and other economists, Chief Economist of the International Monetary Fund (IMF) Gita Gopinath had projected the country's growth rate at 6.1 per cent in 2019 and noted that the Indian economy is expected to pick up at 7 per cent in 2020. However, she has even advised that the Indian government should keep fiscal deficit in check, even though its revenue projections look optimistic. With all these data in place, it would be interesting to see how the government revives the Indian economy in coming times.