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Union Budget 2019-20: Fiscal Deficit Numbers Will Be Eagerly Watched

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With expenditure mounting and revenues for the government likely to slow, because of slower economic growth, all eyes would be on the fiscal deficit numbers. In all likelihood the fiscal deficit for 2019-20, would be maintained at 3.4 per cent of Gross Domestic Product.

Fiscal discipline in the past has been good

Under former Finance Minister, Arun Jaitley, the fiscal deficit of the government has been well maintained. This year too, the number maybe sacrosanct, though expenditure maybe controlled, especially the infrastructure part of it.

Union Budget 2019-20: Fiscal Deficit Numbers Will Be Eagerly Watched
 

However, with private sector investment failing to pick-up, the key would also remain government expenditure to propel the economy. It is hence paramount that the government does not curb expenditure to a great extent. However, managing the deficit numbers and boosting infra investment would be something the government would need to balance.

Also, the Pradhan Mantri Kissan Scheme and fulfilling some of the poll promises is likely to put further pressure on government resources.

Another worry for the government would be rising crude prices. Crude oil jumped almost 9 per cent last week and if the same trend prevails, we might see the subsidy bill rising. This is another worry in containing the fiscal deficit.

Again, revenue from divestment would remain the key for the government. In the past years, the divestment target has not been achieved.

Overall, no great changes are expected on the fiscal deficit than mentioned in the interim budget 2019. The only worry is the economic slowdown, which could reduce revenues.

GoodReturns.in

Story first published: Monday, June 24, 2019, 11:38 [IST]
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