New Delhi: Finance Minister Nirmala Sitharaman on Wednesday said the projected fiscal deficit of 6.9 per cent for the current financial year is a "responsible" target as the government has tried to ensure a balance between keeping up expenditure and being fiscally prudent. Making an intervention during the discussion on the Union Budget 2022-23 in the Lok Sabha, the minister also said the Rs 1 lakh crore loan for states will help in speeding up infrastructure development and capital expenditure.
In her Budget speech on February 1, Sitharaman had said the revised fiscal deficit in the current financial year is estimated at 6.9 per cent of GDP as against 6.8 per cent of GDP projected in the budget estimates. "I don't want anyone to think this (fiscal deficit estimate) is unusual. The pandemic was unusual and therefore 6.9 per cent is a responsible fiscal deficit. That is the kind of fiscal deficit ... we have tried to do balancing between keeping up spending and being fiscally prudent," Sitharaman said. She was responding to certain remarks made by NCP leader Supriya Sule during the discussion.
In the Budget speech, Sitharaman had also said the fiscal deficit in 2022-23 is estimated at 6.4 per cent of GDP, which is consistent with the broad path of fiscal consolidation announced by her last year to reach a fiscal deficit level below 4.5 per cent by 2025-26. "While setting the fiscal deficit level in 2022-23, I am conscious of the need to nurture growth, through public investment, to become stronger and sustainable," she had said.
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Regarding giving Rs 1 lakh crore loan to states, Sitharaman on Wednesday said the amount is being given to states because "we want to speed up infrastructure (development) and capital expenditure". The amount is over and above what the states have been given under their borrowing limits and so it is not going to affect their borrowing limits. When the states are being given the money it is more with the intention for several projects which they would want to complete. They can use this amount in total, the minister said. "I thought it was the way in which we are supportive of the states, therefore we have given it. So, one it does not affect the FRBM, two, it does not give you (states) any interest burden, and three, you can use it for any project you want to do," she said.
The Fiscal Responsibility and Budget Management (FRBM) Act provides for ensuring fiscal discipline. In the Budget speech, Sitharaman had said that for 2022-23, an allocation of Rs 1 lakh crore will be given to states to assist them in catalysing overall investments in the economy. These fifty-year interest free loans are over and above the normal borrowings allowed to the states.
PTI
