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17-Dec2018

Govt will stick to 3.3% fiscal deficit target in FY19, clock growth rate of 7-8%: Jaitley

Expressing optimism over India's fiscal position, Finance Minister Arun Jaitley has said that the government will stick to its fiscal deficit target in the current financial year (FY19) 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. The government has budgeted to contain fiscal deficit at 3.3% of the Gross Domestic Product (GDP) in the current fiscal, lower than 3.5% in 2017-18. As per latest data, fiscal deficit in April-October period stood at 103.9% of budget estimates.

On the growth front, he said even though there are global uncertainties, India will clock a growth rate of 7-8% and will retain the tag of the world's fastest growing major economy. He added 'in course of the next few years, we intend to overtake the UK in terms of GDP and come close to Japan in terms of GDP not per capita income'. Since India is a major importer, Jaitley said oil prices have a direct impact on the country. He also said India 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 current account deficit (CAD). The CAD, which is the difference between the inflow and outflow of foreign exchange, widened to 2.9% of GDP in the July-September quarter from 2.4% of GDP in April-June.

Noting down the challenges to the economy, the Finance Minister 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 challenge 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'. He said India cannot afford to have fragile coalitions for stable policy decisions and continue on the path of reforms. He said a coalition government would lead to a situation where the country probably will have a helpless Centre dependent on these kind of players.


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