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Thursday, January 14, 2016 19:11 IST
Govt to present 201617 budget on Feb 29Fiscal deficit to be main concern in the budget.BY ISHAAN GERA
Finance Minister Arun Jaitley will presentthe general budget for 201617 on February29, minister of state for finance JayantSinha said on Thursday. This will be thethird budget of the Narendra Modiledgovernment since coming to power in 2014and the second fullterm budget.
Jaitley presented a more realistic budgetlast year with not much in terms of bigbang reforms. This year, the markets andanalysts will be watching how the finance
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1/15/2016 Govt to present 201617 budget on Feb 29 | VCCircle
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minister balances the constraints to thefiscal deficit from the seventh paycommission’s recommendations on wagehikes for central government employees andthe government’s approval to the onerank,onepension plan for defence personnel.
The markets will also be expecting a morerational divestment agenda. While thegovernment had announced plans to raiseRs 68,500 crore from disinvestment in thecurrent fiscal year, it has achieved just onefifth of the target so far.
The finance minister has already starteddiscussions with economists, trade unions
and IT sectors and will cover more industries in the runup to the budget.
The major concern in this budget is about revising the fiscal deficit target. While thegovernment is widely expected to meet its target for 201516, set at 3.9 per cent of GDP,there is less optimism about the next year’s goal of 3.5 per cent.
“This will be make or break, in terms of rationalization of expenditure and allocation to keysectors. While the government may deviate due to elections in some of the key states, thebudget as was last year will be more realistic as the government lacks the fiscal space toplay much with expenditure,” said Arun Singh, senior economist at Dun and Bradstreet.
A change in the fiscal deficit target will not only be a loss of face for the government but willalso defer further easing of monetary policy. This is because a rate cut from the central bankis predicated on the government’s fiscal consolidation roadmap.
“They may not be very aggressive to take the fiscal deficit to 3.5 per cent, they may retainit at 3.83.9 per cent. They are aware of the fact that the government is the only entity topush forward spending, so whatever could not be completed this year may be taken up inthe next,” said Madan Sabnavis, chief economist at CARE ratings.
Arun Jaitley, Finance Minister
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