Finance Minister Arun Jaitley. Illustration: Ajay Mohanty
A day after dithering on the fiscal glide path, Finance Minister Arun Jaitley, upbeat on the Moody’s upgrade, said the government would maintain fiscal discipline and adhere to the road map suggested by a government-constituted panel.
“We intend to maintain the fiscal glide path. We believe that the upgrade is a belated recognition of all the positive steps that have been taken in the past few years that contributed to the strengthening of the Indian economy,” Jaitley told a press conference after Moody’s upgraded India’s ratings, giving credit to the Narendra Modi government’s reform initiatives. He added that the government’s track record had been one of the better records in India’s history as far as fiscal discipline was concerned. “And we intend to move on that track,” said Jaitley.
However, at a Morgan Stanley event in Singapore on Thursday, he had said, “No pause, but challenges arising from structural reforms (which) could change the (fiscal) glide path.”
The Centre’s fiscal deficit target for 2017-18 is 3.2 per cent of GDP. According to the recommendations of the Fiscal Responsibility and Budget Management panel, the Centre should aim for a fiscal deficit of 2.5 per cent by FY23. For FY19, it has suggested a target of 3 per cent. The recommendations are yet to be accepted by the government.