The government will be able to achieve the fiscal deficit target of 3.9% of GDP in the current fiscal despite problems posed by a slower-than-expected GDP growth, but containing it in 2016-17 will be a challenge due to the additional outgo towards the 7th Pay Commission and a slowing global economy.
The government has pegged the fiscal deficit at 3.5% of GDP for the next fiscal.
Finance minister Arun Jaitley had earlier said Rs 1.10 lakh crore will have to be provided for in 2016-17 for the implementation of the recommendations of the 7th Pay Commission and the One Rank, One Pension (OROP) scheme.
“The coming year is expected to be a challenging one from the fiscal point of view...The chances of India’s growth rate in 2016-17 increasing significantly beyond 2015-16 levels are not very high due to the likelihood of persistence of global slowdown,” the survey said.
“Further, the implementation of the Pay Commission recommendations and the One Rank One Pay (OROP) scheme will put an additional burden on expenditure. Improving tax compliance through better tax administration, tapping new resources etc could help raise more revenue and keep the fiscal deficit at levels projected in the revised fiscal road map.”
On achieving the fiscal deficit target for the current fiscal, the survey said: “This assessment is based on pattern of revenue and expenditure in the first 9 months of the current financial year in spite of the challenges posed by a lower than projected nominal GDP growth.”
Significant increase in revenue receipts, led by buoyant indirect tax collection, higher level of capital expenditure on the plan side, lower level of subsidies and enhanced untied resources transferred to states following the acceptance of the recommendations of the 14th Finance Commission, are some of the developments on the fiscal front so far in 2015-16 , the survey said.