India needs to focus more on revenue deficit than fiscal gap: NITI Aayog

NITI Aayog Vice-Chairman Rajiv Kumar. File photo
India needs to focus more on meeting its revenue deficit target than adhering to the fiscal deficit aim, vice chairman at India’s top federal think-tank NITI Aayog said on Tuesday.

India needs to shift its obsession with the fiscal gap number and this “obsession must end,” Rajiv Kumar told a gathering of industrialists in New Delhi. 

The government spending over the last four years has been a growth driver but the negative perception hasn't receded, which needs to change, he added.

He said that rural wages would not have grown if India had jobless growth in the last four years.

Fiscal deficit in the first three months of the current financial year that started April 1 was at Rs 4.29 trillion or 68.7 per cent of the government’s estimate for this fiscal, narrowing from 80.8 per cent of budget aim in the same period last year. 

The revenue deficit in the first fiscal quarter was at Rs 3.53 trillion, which was 84.7 per cent of FY19 estimate.

On rupee, Kumar said that discourse needs to move away from those who support strong rupee and those who want rupee take its natural value.

India’s fiscal deficit for the last fiscal year ended March 31 was 3.53 per cent, nearly matching the revised target of 3.5 per cent.

He said maintaining fiscal deficit is the highest priority of the government and the PM resisted all pressures to cut duties when oil prices went up. Going forward Kumar hoped that oil prices would be more benign.

He said trade deficit is a cause of concern but that can be only bridged by boosting the exports and not by lowering import.

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