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Union Budget 2017: Fiscal Deficit Target For 2017-18 Set At 3.2%

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Union Budget 2017: Fiscal Deficit Target For 2017-18 Set At 3.2%

Finance Minister Arun Jaitley on Wednesday presented his fourth Budget in Parliament.


Highlights

  1. Mr Jaitley has pegged fiscal deficit target of 3.2% of GDP for 2017-18
  2. This has been done to ensure higher public expenditure
  3. Economists had predicted a fiscal deficit of 3.3% of GDP for 2017-18
Finance Minister Arun Jaitley has settled for a fiscal deficit target of 3.2 per cent of GDP to ensure higher public expenditure for boosting the economy. Economists had predicted a fiscal deficit of 3.3 per cent of GDP for 2017-18. That would be higher than the 3 per cent pledged earlier, but lower than 3.5 per cent that the government has budgeted for the current financial year ending in March.The government has been under pressure from credit ratings agencies like Standard & Poor's which have refused to upgrade India's ratings demanding reduction in government's debt.

The Economic Survey, prepared by Chief Economic Advisor Arvind Subramanian, on Tuesday questioned the criteria used by international ratings agencies to rate the debt profile of different countries. In a chapter titled 'Facts About India', the Economic Survey questions biases in perception of ratings agency Standard & Poor's while rating India and China.

Earlier this month, S&P's India analyst Kyran Curry had told Reuters, "What we mainly focus on is the change in the pace of the debt accumulation and the debt stock."

In the absence of an upgrade in the credit ratings, the cost of debt to the Indian government remains high from foreign institutions, impacting India's growth prospects.

Ahead of the budget, International ratings agency Moody's had said, "On the fiscal front, the government will likely remain committed to achieving its fiscal deficit target of 3.5 per cent of GDP for the fiscal year ending March 2017. However,room to reduce the deficit further to the target of 3 per cent of GDP in the following year will be limited, due to the need for increased infrastructure spending and higher government salaries."


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