Mumbai: India set its fiscal deficit target for the year starting in April at 3.3 per cent of gross domestic product, finance minister Arun Jaitley said on Thursday while unveiling the government's annual budget.
Most analysts had expected the 2018-19 fiscal deficit target to be set at 3.2 per cent of GDP. The deficit target for the year ending in March 2018 was also revised to 3.5 per cent of GDP or Rs 5.9 lakh crore.
Expert Views
Radhika Rao, group economist, DBS, Singapore
"Overall measures have very strong social sector emphasis, which covers agricultural and rural sectors all the way to health and education sectors. Simultaneously, there is focus on infrastructure as well."
"As early as Aug-Sept last year, as the fiscal numbers were coming in, we were expecting a slippage in this target. But it has panned out. The bond market had expected fiscal slippage, I think it has not been as wide as feared."
"Divestment is expected to be much better than targeted for the first time in many years."
Sujan Hajra, chief economist, Anand Rathi Securities, Mumbai
"We were expecting (fiscal deficit of) 3.4 percent for the current year and 3.2 percent for the next year, and these announcements are slightly higher than expected. This is slightly negative for bond markets."
"The long term capital gain is a singular negative thing for the stock markets."
"With the agrarian crisis and unemployment situation, these kind of policies are expected with or without elections."
Shilan Shah, economist, Capital Economics, Singapore
"It was no surprise to us that they relaxed the deficit targets. It looks like the BJP is aiming to shore up support among rural voters, there have been plenty of measures announced to boost the rural economy. These are quite trademark things ahead of an election."
"In cumulative terms, the deficit has already overshot the previous target, it had to be revised up, but it does need to demonstrate some kind of fiscal prudence. The deficit this year will be same as last year, I don't think that comes as a surprise."