FM pitches for bank mergers while addressing the RBI Board.
Sweeping aside concerns on budget figures, Jaitley said that the government factors in “all costs” while planning the budget.
The union finance minister, Arun Jaitley, approached the customary post-budget board meeting of the Reserve Bank of India (RBI) on February 18 and considered “issues related to fiscal policy decisions taken by the government.”
Addressing media following the meeting, Jaitley said that the meeting was an “interaction on interim budget and the overall economy.”
Brushing aside concerns on budget numbers, Jaitley said that the government factors in “all costs” while preparing the budget.
“Our experience in the last 5 years is that there has fairly been big growth as far as revenues are concerned… The transmission through direct benefit transfer (DBT) has helped. My own experience is that when we announce a scheme, we fix an objective, we factor in all expenses, income growth,” Jaitley said.
Inquisitors have expected that the government may discover it challenging to sustain its fiscal deficit at 3.4 percent after proclaiming 2 financial stratagems for rural and unorganized sector.
The government had declared during the interim budget 2019-20 that it would shift direct income of Rs 6,000 a year in the bank account of every farmer (household) who owns less than 2 hectares of land. The scheme, named PM-KISAN or PM-Kisan Samman Nidhi, was allotted Rs 75,000 crore for 2019-20 and Rs 20,000 for December to March period of 2018-19.
Gene Fang, managing director, Moody investor’s Sovereign Risk Group told news agency PTI“While the government's growth assumptions appear reasonable, we think the government will continue to face challenges in meeting its fiscal targets, primarily due to structural increases in spending and difficulties in raising revenue further.”
During the budget speech, the then-interim finance minister, Piyush Goyal, also increased fiscal deficit target from 3.3 percent to 3.4 percent for 2018-19.
Centre has also recommended excluding individuals with taxable income less than Rs 5 lakh per annum from income tax from 2019-20. This has also raised concerns over the government’s revenue generation capability.
Fang told PTI that the 3.4 percent fiscal deficit objective for the year ending March 2020 is more comprehensive than expected, primarily driven by increased spending to provide income support to humble farmers and tax allowances before the general elections in April-May this year.