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No plans to revise fiscal deficit target, cut spending: FM
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SME Times News Bureau | 23 Sep, 2019
The government has no plans to
revise the fiscal deficit or cut any expenditure following the corporate
tax cuts, Finance Minister Nirmala Sitharaman said on Sunday.
The
government cut corporate tax rates on Friday in a move designed to woo
manufacturers, revive private investment and consumption and lift growth
from a six-year low.
With the corporate tax cuts cost Rs 1.45
lakh crore to the exchequer, Sitharaman said that the government is not
planning to cut its expenditure to meet the shortfall.
The
Minister had earlier said infrastructure ministries has been asked to
front load expenditure to revive capital expenditure to boost growth.
The Expenditure Secretary is meeting secretaries of line ministries to
fast-track their allocated spending to boost the economy, she added.
Sitharaman now said the government would only review the fiscal deficit target closer to the 2020-21 budget.
"At
this point of time we are not revising any target. The decision will be
taken later," she told reporters at her residence here, adding that
there was no plan to cut spending currently.
Sitharaman said the
move to cut corporate tax rates is a "calculative risk" and she has not
revised any of the revenue or expenditure targets for the fiscal year
yet.
"I will take a review closer to the stage when revised estimates will be estimated," she said.
She also said the government would decide on additional market borrowings for the second half of 2019-20 later.
Ratings
firm S&P Global said on Friday India's move to cut corporate tax
rates was a "credit negative development" despite potentially boosting
the economy as it will widen its fiscal deficit.
Global rating
agency Moody's said on Saturday that the corporate tax reduction is
credit positive for companies but increases the government's fiscal
risks.
Government sources told Reuters this month that India is
likely to miss its fiscal deficit target for the current financial year
and, toward the end of 2019, be forced to raise it to 3.5 per cent of
GDP from 3.3 per cent after economic growth fell to a six-year low of 5
per cent in the April-June quarter.
Though equity markets
welcomed the move, bond yields spiked to a near three-month high on
speculation that the government may have to borrow more to meet its
spending needs.
On September 20, Sitharaman announced a reduction
in the base corporate tax rate to 22 per cent from 30 per cent as part
of stimulus measures to revive the slowing economic growth.
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