Statsguru: Government deviates from fiscal road map

Allocations to the ministry of drinking water and sanitation have declined by 7% in FY19

Finance Minister Arun Jaitley has chosen to deviate from the path of fiscal consolidation by budgeting the fiscal deficit target for FY19 at 3.3 per cent of the gross domestic product (GDP), from the 3 per cent target under the earlier road map. This marks the second straight deviation from the glided path of fiscal consolidation. As shown in Chart 1, the medium-term fiscal road map now projects the 2020-21 target as 3 per cent. 

The government has also missed its revenue deficit target for FY18. As opposed to the budgeted target of 1.9 per cent of the GDP, the revenue deficit shot up to 2.6 per cent. The Centre proposed to bring this down to 2.2 per cent in FY19, as shown in Chart 2. And despite concerns over tax collections, the Centre has projected gross tax revenue to increase to 12.1 per cent of GDP in FY19, up from 11.6 per cent in the previous year (Chart 3). 

Since general elections are fast approaching, the rural economies, as well as social sectors such as education and health, were the major focus areas of the government. As shown in Chart 4, allocation to the department of agriculture has seen a 13.6 per cent rise in FY19. Though, on the other hand, that for rural development has risen by a mere 3 per cent, as shown in Chart 5. 

Allocations to the ministry of drinking water and sanitation have declined by 7 per cent in FY19 (Chart 6), while that for health and family welfare saw a minor uptick (Chart 7). Spending on school and higher education is projected to increase a mere 3.8 per cent (Chart 8), while that on women and child development has risen by 16.3 per cent (Chart 9).
StatsGuru is a weekly feature. Every Monday, Business Standard guides you through the numbers you need to know to make sense of the headlines.
Budget 2017-18 and 2018-19; Compiled by BS Research Bureau.