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Fiscal deficit kept at 3.2 per cent considering needs for development, says Ashok Lavasa

Finance Secretary Ashok Lavasa, told The Indian Express that both the department and the government do not want such a situation and they are working towards reducing human interface through the use of technology.

Written by Aanchal Magazine , Sandeep Singh | Published: February 8, 2017 3:12:20 am
Ashok Lavasa, Finance Secretary, Finance Secretary Ashok Lavasa,human interface, human interface reduction, FRBM, FRBM act, indian express news, india news, business news Finance Secretary Ashok Lavasa

Ashok Lavasa said that while it was earlier announced to bring the fiscal deficit down to 3 per cent, the government decided to keep it at 3.2 per cent, considering the requirements of development. Excerpts:

What was the reason for keeping the fiscal deficit target at 3.2 per cent?

Earlier it was announced that the fiscal deficit will come down from 3.5 to 3 per cent and we are committed to maintaining that trend and fiscal discipline. However, this year, keeping in view the requirements of development, we have decided to bring it down from 3.5 per cent to 3.2 per cent. Next year it will go to 3 per cent. We will examine the recommendations of the NK Singh Committee on a variety of things then take a decision on what should be the amendment which is required in the FRBM Act.

On the additional powers given to the tax officials, there are concerns in the corporate circles that it will lead to harassment and corruption. Is the department looking into those concerns?

The revenue department and the revenue secretary himself has clarified that it is neither the intention of the government nor will the revenue department let this kind of thing happen where there is unnecessary interference as far as the taxation is concerned. There is an enforcement mechanism which has been in place. Even in the case of the 18 lakh people (who have been identified for apparent mismatch between what is in the record and what they have deposited) they have given them the opportunity to correct or confirm, without meeting anybody. It’s a completely faceless interaction. I think this is a great signal that we don’t want to interfere too much. This is very clear and it has been mentioned repeatedly that we want to reduce human interface to the extent possible and which is why there so much involvement of technology.

You had mentioned about some analysis by ministry to reduce float in relation to MGNREGA. Can you provide the details?

In the public finance management system it is possible for the Ministry of Rural Development to track the flow of funds at different levels till it reaches the final beneficiary. Because of this tracking, the unutilised portion of the fund that were in the pipeline has come down considerably.

And if you do an analysis of past years data with this year, you will find that the float (the funds lying in the pipeline) has reduced drastically.

MGNREGA is a scheme where money actually goes to the beneficiary and into their accounts and the channel is very long. So if you don’t have this system of tracking and monitoring then unutilised money will exist but you will not know. But now, for the Ministry of Rural Development, it is possible to know the same and tell the state government that so much money is already there with you. It will lead to effective deployment of funds. Since you run a deficit, your borrowings come down and that reduces your cost.

The Budget did not mention about the windfall from demonetisation. The Economic Survey however, mentions that there would be windfall from demonetisation and PMGKY (Pradhan Mantri Garib Kalyan Yojana)?

The scheme is still open till March 31. It is for the RBI to give its final position, only then can the government say. But we have budgeted for the RBI dividend that comes every year. So anything more than what we receive normally would only give us some more room for additional expenditure.

As demonetisation and Budget preparations were going on simultaneously, how did demonetisation influence the Budget preparation?

Because of demonetisation, the general impression was that the GDP growth will come down temporarily so we have kept that in view. On the other hand, this whole push to digitisation has been triggered because of demonetisation. So a number of things have been stated on digitisation in continuation of the steps announced by the government earlier. The other thing is that we do believe that the number of steps that we have taken following the demonetisation, there will be greater tax compliance. So it will help us in widening the base, in deepening the taxation regime and overall help us in improving the tax to GDP ratio.

What was the reason to reduce the number of new schemes in the Budget?

This year we have rationalised some Centrally sponsored social sector schemes. We are in the process of rationalising other central sector schemes. We have not announced new schemes. It has been done intentionally because we want to consolidate those schemes and spend more money where the schemes have shown good result and where we are in a position to complete many of those schemes, so that the benefit of the expenditure is realised.

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