Reserve Bank Governor Shaktikanta Das on Friday said the RBI has no doubt over the government’s commitment to meet the fiscal deficit target this fiscal despite the huge corporate tax cut involving a revenue loss of Rs 1.45 lakh and falling indirect tax collections.
Das also scotched media reports that the government might seek an interim dividend of Rs 30,000 crore from the central bank to meet its revenue shortfall after the massive tax cuts.
“The government has made a statement that they will adhere to the fiscal deficit target. Therefore, we have no reason to doubt the commitment to maintain the numbers as given in the Budget,” Das said after announcing the fourth bi-monthly monetary policy.
The Budget has set the fiscal deficit target at 3.3 percent of GDP for the current fiscal but the steeply falling GST collections and the historic cut in corporate taxes have raised concern over the maintainability of the target.
Das said the government has several sources of revenue to meet the fiscal target. “So whatever short fall is expected because of corporate tax rate cuts, the government has the option of increasing or making it up from other sources,” he said. Last month, the finance minister had announced tax cuts for corporates by 10-12 per cent to 25.17 percent, involving a revenue loss of Rs 1.45 lakh crore this fiscal.
On media reports that the government might seek an interim dividend of about Rs 30,000 crore from the RBI towards the end of the financial year so that it could meet the fiscal deficit target of 3.3 percent, Das said, “I have also seen it in the media. That apart I am not aware of any such demand from the government for payment of interim dividend.”
During 2017-18, the government received Rs 10,000 crore as interim dividend from the central bank. Last month, the RBI central board had given its nod to transfer Rs 176,051 crore to the government from its surpluses as per the Bimal Jalan panel report. The Jalan panel also said after the surplus transfer, there would not be any interim dividend.