"... I have pegged the fiscal deficit for 2017-18 at 3.2 per cent of GDP and remain committed to achieve 3 per cent in the following year. With this gradual approach, I have ensured adherence to fiscal consolidation, without compromising the requirements of public investment," he said in the Budget speech.
Addressing a media conference after the Budget presentation, the Finance Minister said the Budget estimate for fiscal deficit was 3.5 per cent for 2016-17 and revised estimate is also 3.5 per and it will be achieved.
Fiscal deficit of 3.2 per cent in absolute terms for the next fiscal comes out to be Rs 5,46,532 crore.
The total expenditure in Budget for 2017-18 has been placed at Rs 21.47 lakh crore.
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"With the abolition of Plan-Non Plan classification of expenditure, the focus is now on Revenue and Capital expenditure. I have stepped up the allocation for Capital expenditure by 25.4 per cent over the previous year. This will have multiplier effects and lead to higher growth," he said.
Talking about the FRBM Review Committee, he said, the Committee has done an elaborate exercise and has recommended that a sustainable debt path must be the principal macro-economic anchor of the fiscal policy.
The Committee has favoured Debt to GDP of 60 per cent for the General Government by 2023, consisting of 40 per cent for Central Government and 20 per cent for State Governments, he said.
"Within this framework, the Committee has derived and recommended 3 per cent fiscal deficit for the next three years. The Committee has also provided for 'Escape Clauses', for deviations upto 0.5 per cent of GDP, from the stipulated fiscal deficit target.
and appropriate decisions taken in due course, Jaitley said, adding, "although there is a strong case now to invoke this Escape Clause, I am refraining from doing so."
Nevertheless, the Finance Minister said he had taken note of the fiscal deficit roadmap of 3 per cent recommended by the Committee for the next three years.
"I have taken into consideration the need for higher public expenditure in the context of sluggish private sector investment and slow global growth. I have kept in mind the recommendation of the Committee that a sustainable debt should be the underlying basis of prudent fiscal management."
The Revenue Deficit for next year is pegged at 1.9 per cent, against 2 per cent mandated by the FRBM Act, he said.
"It will be our endeavour to improve upon these fiscal numbers, especially the fiscal deficit, in the next year, through greater focus on quality of expenditure and higher tax realisation from the huge cash deposits in Banks, triggered by demonetisation," he said.