Subhash Chandra Garg, secretary, department of economic affairs, talks about the fiscal deficit targets set in the budget, the government’s plan to tackle cryptocurrencies and solving the bad debt problem in the micro, small and medium enterprises (MSME) sector.
On the fiscal deficit:
The government has put before the nation a very solid package of consolidation on the borrowing side. We have said that the fiscal deficit will be statutorily limited to 3% by 2021. It might actually happen a year earlier depending upon how things move.
In any case, we do not expect the fiscal deficit to be more than 3.1% in 2019-20. So it will be very close to 3%... so you have a fiscal consolidation path. Additionally, taking the debt rule recommendation of the N.K. Singh committee, we have formalized that the debt-to-GDP ratio will be brought down to 40% and that’s a big reduction in the government’s overall borrowing.
We hope that within this year, the committee will finalize its recommendations and then it will require legal changes, regulatory assignments, but certainly there will be regulations by the end of this financial year.
The exchanges which have been set up currently are not regulated exchanges. They are in a way self-set up, self-regulated. There are no legal or statutory requirements for conducting the KYC (know your customer), there are no records of transactions. When you move to a system of regulated exchanges for crypto assets, then you have a proper trail.
So far, small proprietors and others have not actually been notified for the Insolvency and Bankruptcy Code (IBC)... The additional view which is being taken is how do we help this sector in terms of resolution of their NPAs (non-performing assets) within the banking sector. Those schemes are being contemplated, designed and debated. Very soon the department of financial services will come up with a package on this.