Govt confident of meeting fiscal deficit target

We have confidence in achieving our fiscal deficit targets of 3.9% of GDP this year and 3.5% for next fiscal

Minister of State for Finance Jayant Sinha said on Saturday that the government is committed to the fiscal deficit target for not only 2015-16 but also the next fiscal year, in spite of the mid-year economic analysis calling for a "re-assessment" of the Centre's fiscal consolidation road map.

"We have confidence in achieving our fiscal deficit targets of 3.9 per cent of GDP this year and 3.5 per cent for next fiscal," Sinha said at the 88th annual general meeting of industry body Ficci.

He, however, added that next year's fiscal deficit target will be challenging because of the implementation of the Seventh Pay Commission and the One Rank One Pension scheme, the combined spending burden of which could be nearly Rs 1 lakh crore.

"The next year will be a challenging one for us because we have the headwinds of two major factors that are slowing us down. First is agriculture and rural distress because of weak monsoon agriculture and the second is exports slowdown due to macroeconomic weakness. Those two factors are dragging us down," Sinha said.

"We have laid out a very clear fiscal consolidation road map, which is 3.9 per cent of GDP this year and 3.5 per cent next year," he later told reporters on the sidelines of the event.

The mid-year economic analysis, tabled in Parliament on Friday, had struck a note of caution by saying that there was a case for re-assessment of the medium-term fiscal consolidation road map because of the additional expenditure due to the recommendations of the Seventh Pay Commission and the higher pension payout for defence veterans next year.