Govt committed to 6.4% fiscal deficit target for FY23, says Revenue Secretary 

The central government is aiming to not diverge from its current fiscal deficit target of 6.4 percent of GDP. India’s Revenue Secretary Tarun Bajaj, who is currently also holding additional charge of Department of Economic Affairs, said that the government would stick to its projected target of Budget FY 2023, and might not need additional borrowing to support it. 

Presenting the annual budget in February, Finance Minister, Nirmala Sitharaman announced the fiscal deficit target at 6.4 per cent of the GDP for the current financial year 2022-23, compared with 6.7 per cent in the previous fiscal.

In FY22, the Centre reined in the fiscal deficit at 6.7% of GDP. It’s planning to reduce the deficit steadily and restrict it to 4.5% of GDP by FY26. The 10-year G-sec yield eased by 6 basis points on Monday to close at 7.36%. Still, it has risen substantially from 6.81% at the end of March on heightened risks to the economy from rising oil prices and tightening interest rate scenarios globally. 

Analysts expect higher-than-budgeted tax collection to substantially make up for any shortfall caused by extra spending commitments. However, Finance Ministry has cleared the air that government may not need additional borrowing to support it. 
The government has been taking steps periodically to deal with high global crude oil prices in the wake of the Ukraine conflict that has added to inflationary pressure across the globe, the official said. The country meets about 85% of its oil demand through imports. 

Recently, Centre reduced the windfall tax on domestically produced crude to Rs 17,000 a tonne, and also cut levy on exports on diesel by Rs 2. Commenting on this, Bajaj also said that the government is conducting a review of global fuel prices every 2 weeks, and will scrap windfall tax if crude prices fall.