The Finance Ministry on Friday stressed that it would continue its fiscal consolidation plan while taking measures to boost economic growth through effective spending of Budgeted funds.
“Government is committed to promoting and strengthening inclusive and sustainable development by ensuring proper and effective utilisation of funds provided in the annual Budget without compromising fiscal consolidation,” said an official release.
The comment is significant given that it comes after discussions and debate on whether to continue fiscal consolidation in 2016-17 or continue public spending to boost growth. The medium term fiscal consolidation plan has envisaged reducing the fiscal deficit from 3.9 per cent in 2015-16 to 3.5 per cent in 2016-17.
The Mid-Year Economic Analysis had noted that higher economic growth may be difficult next fiscal too and continuing public spending could help push it up.
However, the Finance Ministry statement stressed that the fiscal and revenue deficit for 2015-16 is firmly under control.
“As a result of prudent policies formulated during 2015-16, the fiscal deficit at the end of November 2015 is ₹4.83 lakh crore or 87 per cent of the Budget estimate for this fiscal,” it said, adding that the present fiscal situation is an improvement over the previous year when the fiscal deficit was 98.9 per cent of Budget estimates 2014-15.
Similarly, the effective revenue deficit (revenue deficit net of grants for creation of capital assets), which was ₹2,64,404 crore in November 2015, has shown a significant decrease of 20 per cent (₹65,087 crore) over November 2014, it said.
The Ministry also said the government is also incurring expenditure on creation of capital assets. “As regards expenditure, against Budget estimates of ₹1,35,257 crore for Plan Expenditure for creation of capital assets, the Government of India has already incurred ₹97,788 crore (72 per cent of BE) as compared to ₹62,146 crore (51 per cent of BE) in the corresponding period of last year,” the statement said.