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No plans to revise fiscal deficit target or cut spending now: Sitharaman

The government cut corporate tax rates on Friday in a surprise move designed to woo manufacturers, revive private investment and lift growth from a six-year low.

Manoj Kumar | Reuters  |  New Delhi 

Finance Minister Nirmala Sitharaman addresses a press conference, in Chennai, Sunday, Sept 1, 2019. (PTI Photo/R Senthil Kumar)
Finance Minister Nirmala Sitharaman addresses a press conference, in Chennai, Sunday, Sept 1, 2019. (PTI Photo/R Senthil Kumar)

The government will not revise its target immediately and is not planning any spending cuts at this stage, said Finance Minister on Sunday, after slashing rates to boost a flagging economy.

The government cut rates on Friday in a surprise move designed to woo manufacturers, revive private investment and lift growth from a six-year low that has led to major job losses and fueled discontent in the countryside.

Though equity markets welcomed the move, bond yields spiked to a near three-month high on speculation the government may have to borrow more to meet its spending needs.

The measures will cut revenue by Rs 1.45 trillion ($20.4 billion) in the current fiscal year, according to government estimates. But Sitharaman said the government would only review the target closer to the 2020/21 budget.

"At this point of time we are not revising any target. The decision will be taken later," she told reporters at her residence in New Delhi on Sunday, adding that there was no plan to cut spending currently.

Sitharaman also said the government would decide on additional market borrowings for the second half of 2019/20 later.

Ratings firm S&P Global said on Friday India's move to cut rates was a "credit negative development" despite potentially boosting the economy as it will widen its

Government sources told Reuters this month that India is likely to miss its fiscal deficit target for the current financial year and, toward the end of 2019, be forced to raise it to 3.5% of GDP from 3.3% after economic growth fell to a six-year low of 5% in the April-June quarter.

First Published: Sun, September 22 2019. 18:24 IST
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