The Centre’s fiscal deficit may have seen some slippage in 2019-20, but the Modi government has maintained the glide path towards target of 3 per cent fiscal deficit by 2020-21, said interim Finance Minister Piyush Goyal on Friday.

Goyal attributed the fiscal slippage largely to the additional spend arising from ‘PM Kisan’, a new scheme announced today as income support for poor landowning farmers. The Centre would entirely fund the estimated ₹95,000 crore spend under ‘PM Kisan’ for 2018-19 (₹20,000 crore) and 2019-20 (₹75,000 crore).

After completing the fiscal deficit consolidation programme, the Centre will next focus on debt consolidation, Goyal said in his interim Budget speech on Friday.

India’s debt-to-GDP ratio was 46.5 per cent in 2017-18. The FRBM Act prescribes that the debt-to-GDP ratio of the Centre should be brought down to 40 per cent by 2024-25.

As against the Budget estimate of fiscal deficit of 3.3 per cent of GDP for 2018-19, the revised estimate has pegged the fiscal deficit at 3.4 per cent. Even for 2019-20, the Centre has pegged the Budget estimate for fiscal deficit at 3.4 per cent of the GDP.

This translates into increased fiscal deficit of about ₹10,000 crore, which is largely going to be met from increased net borrowings of ₹32,500 crore for 2018-19.

This net borrowing of about ₹32,500 crore would include Treasury bills issuance of about ₹8,000 crore, said Subash Garg, Economic Affairs Secretary, later .

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For 2019-20, the interim Budget has pegged the fiscal deficit target at 3.4 per cent of GDP — an increase of ₹80,000 crore (12.8 per cent jump) on a year-on-year basis. Of this as much as ₹75,000 crore is earmarked for the ‘PM Kisan’ scheme.

“We would have maintained fiscal deficit at 3.3 per cent for year 2018-19 and taken further steps to consolidate fiscal deficit in year 2019-20. However, considering the need for income support to farmers we have provided ₹20,000 crore in 2018-19 RE and ₹75,000 crore in 2019-20 BE. If we exclude this, the fiscal deficit would have been less than 3.3 per cent for 2018-19 and less than 3.1 per cent for year 2019-20,” Goyal said in his Budget speech.

RBI dividend

The Centre expects the RBI to fork out an interim dividend of about ₹28,000 crore.

This has been budgeted for in the revised estimated for 2018-19, a top Finance Ministry official said. The RBI Board has to formally meet on this issue and declare the interim dividend.

Disinvestment

For 2018-19, the Centre has pegged the disinvestment target at ₹80,000 crore in the revised estimates, which is the same as the Budget estimate. For 2019-20, the disinvestments receipt target has been pegged at ₹90,000 crore.

Disinvestment Secretary Atanu Chakraborty expressed confidence that disinvestment target of ₹80,000 crore would be met for 2018-19 although the total mop till end January was only ₹35,533 crore.

Typically 55 per cent of the disinvestment target gets achieved in the second half of financial year and that will be the case this time too, he said.

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