Jaitley says revenues to be comfortable, no fiscal slippage seen

A set of data next week will give an indication of which way prices and industrial activity are moving

New Delhi

India’s revenues will be “reasonably more comfortable” in the financial year starting April 1 and the government will be able to maintain its deficit target, Finance Minister Arun Jaitley said on Saturday.

“I can’t at this stage say there would be any slippage,” Jaitley told reporters after the customary post-budget meeting between the government and the central bank. “I am sure we will be able to maintain the target quite well.”

India’s annual statement of revenues and expenditures on Feb. 1 widened goals for the fiscal deficit as the government fell short of its tax target and sought to boost spending on the poor and farmers before key state and national elections. The government will aim for 3.3 per cent next year rather than its earlier 3 per cent goal. Reserve Bank Governor Urjit Patel flagged inflationary risks from an expansionary budget after this month’s monetary policy review, while leaving the benchmark interest rate unchanged.

A set of data next week will give an indication of which way prices and industrial activity are moving. Industrial output growth in December is seen slowing after reaching a 25-month high. Consumer price inflation is estimated to slow from a 17-month high reached in December.

The RBI’s Patel, who was with Jaitley on Saturday, said both the central bank and capital markets regulator Securities & Exchange Board of India need to be cognisant of the risks from any “bubble” in the markets.

India’s benchmark S&P BSE Sensex has dropped 5.5 per cent so far this month, in line with a rout in global equities. The index climbed 28 per cent in 2017.

“So far neither globally, nor in India, have we felt that this bubble could lead to a very major problem,” he said. “The good thing in this cycle of high equity prices is that almost everyone who has been part of this has talked about a possibility that this can’t go on too long.”


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