Budget Pegs Fiscal Deficit Target For 2018-19 At 3.3%, Stocks Fall

Markets were spooked by the higher -than-estimated fiscal deficit target, leading to Sensex falling 100 points.

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Budget Pegs Fiscal Deficit Target For 2018-19 At 3.3%, Stocks Fall

Economy under the first three years of the NDA rule clocked growth of 7.5 per cent, Arun Jaitley said.

In Budget 2018-19, the government has pegged fiscal deficit at 3.3 per cent of GDP for the fiscal year starting April 1, 2018. This is higher than the 3 per cent as projected earlier in the fiscal consolidation roadmap. A Reuters poll showed most economists expected a 3.2 per cent deficit in 2018-19, as the government looks to increase investments in areas such as agriculture.  For FY18, the government estimated fiscal deficit of 3.5 per cent, higher than the 3.2 per cent projected by Budget 2017. There has been a shortfall in non-tax revenues due to deferment of spectrum auction, the finance minister said.

Markets were spooked by the higher -than-estimated fiscal deficit target, leading to Sensex falling 100 points.

Earlier this week, investors spooked this week after India's Chief Economic Advisor Arvind Subramanian, in an economic survey ahead of the budget, suggested "a pause" in the fiscal consolidation path, while the government attempts to reinvigorate growth.

Finance Minister Arun Jaitley in his Budget 2018-19 speech exuded confidence that the economy in on the path of over 8 per cent growth rate.  The finance minister said that 6.3 per cent growth clocked in the second quarter signalled the turnaround in economy. The growth in the second half of this fiscal (October-March) is expected to accelerate to between 7.2 per cent and 7.5 per cent, he added.

The finance minister also said that manufacturing is back on the growth path and recapitalised state banks will also be able to support growth.

In his Budget speech, the finance minister said that the government is focused on infrastructure creation, higher farmers' income and economic reforms. The indirect tax regime has been made simpler by the introduction of GST, he added. The structural growth initiative announced by the government will help the government to accelerate in the future, the minister said. 

He also said that economy under the first three years of the NDA rule clocked growth of 7.5 per cent.
 

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