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Last updated: 05 Jun, 2018  

Up.9.Thmb.jpg Fiscal deficit, GDP data: Is it a turnaround

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Bikky Khosla | 05 Jun, 2018

In a big relief, the government has broadly met its fiscal deficit target of 3.5 percent for the financial year 2017-18. According to provisional data released by the Controller General of Accounts (CGA), fiscal deficit for the period stood at 3.53 percent of the country's Gross Domestic Product. It reached Rs 5.91 lakh crore as against the revised estimates of Rs 5.94 lakh crore. In budget 2018-19, the target was revised to 3.5 percent from 3.2 percent, and now it is a pleasant surprise that the revised target is almost achieved.

Fiscal deficit for the April-February period had stood at 120 percent of the revised estimate. Similarly, revenue deficit and primary deficit for the period had stood at 119 percent and 414 percent of the revised FY18 target. There was pressure on the government due to implementation of the Goods and Services Tax. In the background of this, it looked like the government may not be able reach the deficit target even after the revision, but factors like rise direct tax, non-tax revenues, expenditure savings and disinvestment helped contain the deficit.

Meanwhile, India's Gross Domestic Product registered 7.7 percent growth during the January to March quarter, against China's 6.8 percent growth for the period, enabling the economy to again retain its position as the fastest growing major economy. This is the fastest pace of growth in seven quarters. This is again encouraging. Nobody anticipated such an extent of growth. However, for the whole fiscal year that ended March 31, growth slipped to 6.7 percent, down from 7.1 percent in 2016-17.

So, what explains the spike in fourth-quarter GDP growth? The government claims that the growth indicates turnaround in manufacturing and construction activity and pick up in private investments. The data shows a robust 9.1 percent growth in manufacturing, compared with 6.1 percent a year ago. The farm and services sectors also did well. However, a recent report pointed out that it was only "the hand of government" that lifted GDP growth. Additionally, exports and private consumption also disappointed. These aspects demand attention from government.

I invite your opinions.

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GDP data
Dr G Ranganathan | Thu Jun 14 00:12:28 2018
Sir, good thoughts...but if you factor in the damage caused by international crude fuel rate issue, the government needs to be appreciated.

fesical deficit
Sudhish Kumar | Fri Jun 8 06:33:40 2018
surprisingly good news for all Indians. we should congratulate the Govt. for its policy and efforts to meet the goal.

I read it
Tikaram pal | Thu Jun 7 12:00:54 2018
Itis big platform

Rohan | Thu Jun 7 04:25:34 2018
So does it mean that the higher the tax collected the sooner we can achieve the target for fiscal deficit ?

Anti-growth story
TAPAN SUR | Thu Jun 7 02:16:08 2018
as elections approach suddenly the GDP & other economic factors start showing healthy growth trends.Let's consider this narrative:A table with dust,a pen,a diamond pendant,glass mug is wiped clean with a duster to remove dust without removing the precious usable items what will happen? Visualize!That is exactly what happened after 8th Nov.2016,a good move to clean but exactly like the narrative, I explained above.There are inherent dangers in the economy which will exhibit itself from time to time because of mismanagement & the fear of not accepting it,because of political reasons.Very soon I believe there will be stagflation because of the above.The construction industry is already on oxygen apart from the sub 50lakh house which is being built & may not have so much demand as to where it is built.Jobs have dried up & a majority of them available are not interesting.Political decisions are not wrong but how it is implemented holds the key to success.This is election season,with realignments the seats of power in order to stay on, will go for popular policies which will further downgrade the economy.In all this, there will always be some who will fish well at the bottom & make merry,but is that how we manage our governance of 123 crores diverse population?

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