Jaitley accepts 'challenge', sticks to fisc targets

Finance Minister Arun Jaitley stuck to his predecessor P Chidambaram's target of a fiscal deficit at 4.1 per cent of gross domestic product (GDP) for 2014-15, even as he moderately raised the threshold for income tax exemption and deductions and raised Plan expenditure marginally.

The finance minister also stuck to the previous government's road map based on the Vijay Kelkar committee report, which pegs the fiscal deficit at 3.6 per cent of GDP in 2015-16 and three per cent in 2016-17.

"My predecessor has set up a very difficult task of reducing fiscal deficit to 4.1 per cent of the GDP in the current year.... I have decided to accept this target as a challenge," Jaitley said in his Budget speech.

In the last financial year, the fiscal deficit was estimated at 4.6 per cent of GDP in the revised estimates, but the final figure came down to 4.5 per cent.

For this year, Jaitley has pegged the Centre's tax receipts, net of devolution to the state, at Rs 9,77,250 crore, almost Rs 9,000 crore less than Rs 9,86,417 crore in the interim Budget.

However, this will be more than made up by higher-than-expected non-tax receipts at Rs 2,12,505 crore, up almost Rs 32,000 crore over Rs 1,80,714 crore in the interim Budget.

Disinvestment receipts have been pegged at Rs 63,425 crore, Rs 6,000 crore more than rRs 56,925 crore given in the interim Budget.

After loan recoveries at Rs 10,527 crore, the Centre's total receipts (minus market borrowings) stood at Rs 12.63 lakh crore, around Rs 29,000 crore more than the interim Budget.

On the expenditure side, Jaitley raised allocations by about Rs 20,000 crore to Rs 5,75,000 crore against Rs 5,55,322 crore in interim Budget.

On the non-Plan side, Jaitley has accounted for roughly the same expenditure (Rs 12,19,892 crore) as the interim Budget (Rs 1,20,7892 crore). Total expenditure stood at Rs 17.94 lakh crore against Rs 17.63 lakh crore provided in the interim Budget.

Overall, Jaitley's revenue allocations are higher by Rs 29,000 crore, and expenditure by Rs 31,000 crore than the interim Budget. The incumbent finance minister's fiscal deficit is also higher by around Rs 2,000 crore at Rs 5.31 lakh crore than Chidambaram's provision of Rs 5.29 lakh crore. As a percentage of GDP, both come to 4.1 per cent, after rounding off.

The revenue deficit, the excess of expenditure on non-capital expenses over receipts, was pegged at Rs 3.78 lakh crore for 2014-15, representing 2.9 per cent of GDP by Jaitley against Rs 3.82 lakh crore by Chidambaram, which meant three per cent of GDP. In the revised estimates last year, it was pegged at 3.3 per cent of GDP but ended up marginally lower at 3.2 per cent.

The government is also projected to pay back Rs 2.16 lakh crore on its debt this financial year, almost Rs 41,000 crore lower than Rs 2.47 lakh crore given in the interim Budget. However, interest payment is unchanged at Rs 4.27 lakh crore in both the Budgets. This is due to a change in accounting of debt repayment, officials said.