The Economic Survey 2018-19 says the General Government (Centre plus States) has been on the path of fiscal consolidation and fiscal discipline. It says revenue augmentation and expenditure reprioritization and rationalization continue to be integral to fiscal reforms. “Broadening and deepening the direct tax base and stabilization of Goods and Services Tax are the other priorities. Improving the quality of expenditure remains the key priority. Meeting allocational requirements without diversion from the newly revised fiscal glide path remains the foremost challenge.
Despite several headwinds, Indian economy is expected to grow at 6.8 per cent (as per provisional estimates released by Central Statistics Office) in 2018-19 while maintaining macro-economic stability. The growth with macro-stability stems mainly from ongoing structural reform, fiscal discipline, efficient delivery of services and financial inclusion”, says the Survey. The Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman tabled the Economic Survey 2018-19 in Parliament today.
The revised fiscal glide path envisages achieving fiscal deficit of 3 per cent of GDP by FY 2020-21 and Central Government debt to 40 per cent of GDP by 2024-25. The Survey notes the Medium Term Fiscal Policy Statement presented along with the Union Budget 2018-19 aimed to reach the fiscal deficit target of 3.3 per cent of GDP in 2018-19 BE. “The FY 2018-19 has ended with fiscal deficit at 3.4 per cent of GDP and debt to GDP ratio of 44.5 per cent (Provisional). As per cent of GDP, total Central Government expenditure fell by 0.3 percentage points in 2018-19 PA over 2017-18, with 0.4 percentage point's reduction in revenue expenditure and 0.1 percentage point increase in capital expenditure. With respect to States finances, their own tax and non-tax revenue display robust growth in 2017-18 RE which is envisaged to be maintained in 2018-19 BE” says the document.
The Survey adds that combined liabilities of Centre and States have declined to 67 per cent of GDP as on end-March 2018 from 68.5 per cent of GDP as on end-March 2016. The fiscal deficit of General Government is further expected to decline from 6.4 per cent of GDP in 2017-18 RE to 5.8 per cent of GDP in 2018-19 BE.
Budget 2018-19 envisaged a growth of 16.7 per cent in Gross Tax Revenue (GTR) over 2017-18 Revised Estimates (RE). It was estimated at Rs. 22.7 lakh crore, which was 12.1 per cent of GDP. However, the growth in GTR for 2018-19 Provisional Actuals (PA), though lower than envisaged in the budget estimate, shows an increase of 8.4 per cent over 2017-18. Owing to improved performance of corporate tax, direct taxes have grown by 13.4 per cent in 2018-19 PA over 2017-18, the Survey states.