Finance minister Nirmala Sitharaman
Finance minister Nirmala Sitharaman

Budget 20 19: Govt cuts FY20 fiscal deficit target to 3.3% of GDP

  • Sitharaman proposes to bringing down fiscal deficit target to 3.3% of GDP in 2019-20 instead of 3.4% of GDP envisioned earlier
  • Increase in income tax surcharge on those earning 2-5 crore by 3% and 7% on those earning above 5 crore will also garner additional revenue for the government

New Delhi: The government aims to cut its fiscal deficit target to 3.3% of GDP in 2019-20 against 3.4% estimated earlier, finance minister Nirmala Sitharaman said in her maiden Budget speech on Friday.

This could surprise the market as analysts were expecting Sitharaman to retain the 3.4% fiscal deficit target if not raise it further to give a fiscal stimulus. A slowing economy and tepid growth in tax collections will make the target more daunting.

However, reliance on greater non-tax revenue through stake sale in public sector enterprises may shore up government finances. The government has raised its divestment target to 1.05 trillion from 90,000 crore estimated earlier. Increase in income tax surcharge on those earning 2-5 crore by 3%, and 7% on those earning above 5 crore will also garner additional revenue for the government.

Higher customs duties on petroleum products and gold will also lead to higher revenue collection. Customs duty on gold has been increased to 12.5% from 10%.

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