“If inflation is 5 percent and GDP growth is likely at 5.5 percent, nominal GDP growth of 10.5 percent is likely with a tax buoyancy of 1. The government is not optimistic but realistic.”
The government is confident of meeting its fiscal deficit target this financial year despite any pre-election expenditure increases as food and fertiliser subsidies won’t exceed the budgeted amount and revenue targets are easily achievable, according to a senior finance ministry official.
“There may be some new things in an election year, some new things may come up,” the official, who did not want to be identified, told Moneycontrol. “Any additional expenditure may come this year, but we are fairly confident of sticking to our overall deficit numbers.”
Finance Minister Nirmala Sitharaman, in her budget speech on February 1, lowered the fiscal deficit target to 5.9 percent of gross domestic product in this financial year from an estimated 6.4 percent last fiscal year.
The budget has estimated gross tax revenues to rise by 10.5 percent to Rs 33.61 lakh crore this fiscal, while total expenditure is to rise 7.5 percent to Rs 45.03 lakh crore.
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