Government Confident Of Meeting Fiscal Deficit Target Despite Calls For More Spending: Report

The Indian government remains optimistic about achieving its fiscal deficit target of 5.9 per cent of the GDP (gross domestic product) for the current fiscal year.

This is despite increasing demands for additional funds, particularly for programmes like the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), as reported by Moneycontrol.

The Ministry of Rural Development has requested additional funding for MGNREGS, but the Finance Ministry is yet to make a final decision on this matter.

With approximately 95 per cent of the budget allocation for MGNREGS already utilised this fiscal year, it is expected that the government will allocate an additional Rs 30,000 to Rs 40,000 crore for the programme.

The allocated budget for the rural employment scheme for this fiscal year is set at Rs 60,000 crore.

In addition to potential increases in spending for the rural job plan, there are reports suggesting that the central government may extend its free foodgrain distribution initiative beyond December and enhance financial assistance to farmers through the income assistance scheme.

The Finance Ministry is currently engaged in discussions with various ministries to evaluate spending patterns for the ongoing fiscal year.

This assessment will enable the government to review actual expenditures by different departments and determine potential financial savings that could be allocated to various policy priorities.

During election years, concerns often arise regarding the government's ability to adhere to its predetermined fiscal deficit target, especially in the face of mounting demands for increased spending on popular programmes and subsidies.

Nevertheless, economists believe that fiscal concerns are manageable due to the government's existing financial reserves.

Furthermore, an unexpectedly higher dividend surplus transfer from the Reserve Bank of India (RBI) and a substantial rise in direct tax collections are expected to bolster the government's efforts to meet the fiscal deficit target for the 2023-24 fiscal year.

The fiscal deficit for the first five months of this fiscal year stands at Rs 6.43 lakh crore, accounting for 36 per cent of the full-year target of Rs 17.87 lakh crore.