Throwing his weight behind Finance Minister Nirmala Sitharaman's budget numbers, Reserve Bank Governor Shaktikanta Das has said that there is no reason to doubt that the government will be able to cut fiscal deficit to 3.5% of the GDP in the fiscal beginning April 1.
Das said the government has remained within the limits set by the Fiscal Responsibility and Budget Management (FRBM) Committee for the budget deficit.
The Center missed deficit target for the third year in a row, pushing shortfall to 3.8% of the GDP in the current fiscal as compared to 3.3% previously planned. The fiscal deficit target for the coming fiscal year starting April 1, has been fixed at 3.5%.
The fiscal deficit is the shortfall in a government's income compared with its spending. It essentially means that the government is spending beyond its means.
"With regard to the fiscal management of the government, the government has remained within the recommendations FRBM committee," Das said. "So, therefore, the excess fiscal deficit has been restricted to 0.5%. The government has adhered to that and a large part of the financing of fiscal deficit next year will come from small savings."
The FRBM committee headed by N K Singh had recommended fiscal deficit to be cut to 2.8% in 2020-21 fiscal and to 2.5% by FY2023.
Das said there is no reason to doubt that the fiscal deficit for the next year would be met. "There is no reason for anyone to doubt that number. The Budget has been presented just about a fortnight ago. There is no reason to disbelieve that number," he said.
The fiscal slippage announced in the government's new FY2021 budget is modest relative to previous targets.
