This story is from January 20, 2020

Government must be transparent, reveal real fiscal deficit in Budget: Experts

Amid calls for easing the fiscal deficit target to boost spending and accelerate growth, experts, including NITI Aayog, have urged the government to be transparent in revealing the actual deficit rather than resort to below the line and offbudget numbers to show a better picture.
Government must be transparent, reveal real fiscal deficit in Budget: Experts
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NEW DELHI: Amid calls for easing the fiscal deficit target to boost spending and accelerate growth, experts, including NITI Aayog, have urged the government to be transparent in revealing the actual deficit rather than resort to below the line and offbudget numbers to show a better picture.
“If you take into account the Centre, states and PSUs, the off-budget items, the deficit is much higher than budgeted,” said a source, adding that the advice of the government think tank is to come clean on the deficit, which is a measure of the Centre’s net borrowings.

Against the backdrop of a slowdown in the economy, growth is estimated at 5% in 2019-20, the slowest pace in 11 years, and there have been calls to ease the deficit target. The government aims to rein in the deficit at 3.3% of GDP in the current financial year, which ends in March. But sluggish revenues and spending commitments have already seen reaching 112.4% of the full-year Budget target of Rs 6.2 lakh crore at the end of December.
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Receipts from stake sale in state-run companies have also not taken off and there is a likelihood of the government missing the target of raising Rs 1.05 lakh crore from asset sales in the current fiscal. This has also triggered worries that the fiscal deficit target may be breached.
“There is a need to be transparent and not resort to offline, below-the-lines items to suppress the real deficit. This will comfort everybody,” the source said, adding that the government may ease the target to step up spending at a time when reviving growth is a top priority. There is a section within the government which is of the view that the government need not be rigid about sticking to the deficit target at a time when growth revival has emerged as a number one priority.

Former finance secretary Subhash Chandra Garg has estimated the fiscal deficit to widen to 3.7% to 4% of GDP in the current financial year. In a recent blog post, he has also said the real deficit would be 4.5-5% of GDP, taking into account spending linked to recapitalisation of banks and financial institutions, payment of food subsidy via the National Small Savings Fund and other such spending.
His comments have drawn sharp reactions from government officials, who suggested that Garg as finance secretary opted against heeding to the advice of the disinvestment and revenue departments, while fixing high-receipts targets. “What was he doing last year, when the targets were being fixed? He was the finance secretary. Didn’t he see signs of the economy slowing down?” retorted an official.
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