NEW DELHI: The Centre, brushing aside concerns that it will breach fiscal deficit targets, assured that the tax collection is robust. However, the Current Account Deficit (CAD) may be a matter of concern in this fiscal.
“We are very much on the path of fiscal consolidation. The income tax collection is robust... But Current Account Deficit will not be as good as it was this year. But it won’t be as bad as it is being predicted because oil prices are not expected to rise,” a top finance ministry official said.
CAD, which is the difference between the inflow and outflow of foreign exchange, jumped to $48.7 billion, or 1.9 per cent of Gross domestic product, in 2017-18 fiscal. This was higher than $14.4 billion, or 0.6 per cent, in 2016-17 fiscal.The official clarified that it need not be a matter of concern as the government is prepared to handle any situation.Earlier this week many economists and analysts have raised India’s CAD will widen up to 2.8 per cent of the GDP in the current fiscal on account of higher oil prices that has been accentuated by rupee depreciation and at trade deficit which was at five years high.
While credit rating agency ICRA and Moody’s pegged current account deficit at 2.5 per cent, Japanese financial services major Nomura said that CAD could widen to 2.8 percent of GDP in 2018-19. count deficit is likely to widen to 2.5 per cent in FY 2018-19, up from 1.5 per cent in fiscal 2017 due to higher oil prices and strong non-oil import demand as domestic demand accelerates,” he said. “Net oil imports accounted for 2.6 per cent of GDP in FY 2017-18 and will increase further in fiscal 2019,” Rajiv Biswas, APAC Chief Economist, IHS Markit, said.
Revenue collection under Goods and Services Tax (GST) is well on track and could exceed the target.
He also said that the rate cut effected recently will have minor impact on the revenue collection but that would be compensated by increased compliance and E-way Bill.