The government is not contemplating the revision of the fiscal deficit target of 4.6 per cent for the current financial year.
Speaking at the sidelines of an event, Kaushik Basu, chief economic advisor to the finance ministry, said, “There is no thinking as of now on revising the deficit target. You have to keep in mind that in industrialised countries, there are discussions on going a little slow on fiscal consolidation, owing to the recessionary tendency all over.”
“We are aware we may miss the disinvestment target, But even then, we are aiming to go very close to that (target). Even if we do not make it, we want to be very close to it. So, we are sticking to the target,” he said.
In October, the government had increased its market borrowing plan by Rs 52,800 crore for the second half of the current financial year. The finance ministry had, however, emphasised a higher borrowing target would not result in an overshoot in the fiscal deficit.
Basu said the central bank and the government were moving in the same direction, if not together. He said the last round of policy rate hikes by the Reserve Bank of India (RBI) was ‘sophisticated’. “Taking a pause would mean the central bank may resume monetary tightening some time later. But hiking rates and giving the signal that this is the end of the tightening cycle makes sense,” he said.
Since march 2010, RBI has hiked the policy rate by 375 basis points in thirteen tranches to tame inflation. Basu said inflation was a great concern, and that controlling inflation was a paired effort of the ministry of finance and the central bank.