S C Garg, former Economic Affairs secretary, has claimed that the actual fiscal deficit for 2018-19 is 4.7% — more than a full percentage point than the number claimed by Finance Minister Nirmala Sitharam’s Budget in July.
- According to SC Garg, the official figures hide the true fiscal deficit. That’s because some of the government’s expenditure was funded by the so-called “off-budget” items.
- All government expenditure, revenues and debts are required to be carried out through the Consolidated Fund of India (CFI). If it is done so, the fiscal deficit of the Government should equal to the additional debt incurred during the year, all recorded in the CFI.
- Unfortunately, all these transactions are not recorded through the CFI all the time. Some debt/liabilities are not assumed outside the CFI — either in the Public Account or totally outside the formal accounting system of the Government i.e. outside CFI and Public Account.
- Such transactions are described popularly as Below the Line, Off Budget etc.
Important Info :
- Meaning: Fiscal Deficit is the difference between the Revenue Receipts plus Non-debt Capital Receipts (NDCR) and the total expenditure. In other words, it is reflective of the total borrowing requirements of Government.
- Significance of fiscal deficit: If this ratio is too high, it implies that there is a lesser amount of money left in the market for private entrepreneurs and businesses to borrow. Lesser amount of this money, in turn, leads to higher rates of interest charged on such lending.
- Acceptable level of fiscal deficit: In India, the Fiscal Responsibility and Budget Management Act requires the central government to reduced its fiscal deficit to 3 per cent of GDP. India has been struggling to achieve this mark.
Source : Indian Express