Finance Secy confident of maintaining fiscal deficit target

Finance ministry is confident of maintaining the fiscal deficit target, said Finance Secretary, Ashok Lavasa. "We have done our all our calculations, and spent only where it was necessary – social welfare programmes like MNREGA and crop insurance schemes; we are confident of maintaining the fiscal deficit target with these additionalities in expenditure."Speaking to CNBC-TV18, Lavasa, who is also heading the allowances structure of the Seventh Pay Commission, said the committee will decide on the road map it wants to follow for implementation of the same. "When the Budget was being made, the financial implication of the Seventh Pay Commission was contained by the budget makers and the impact was clear in their mind," he added.On the Goods and Services Tax (GST), he said the government of India will compensate for states. "Its impact on the fiscal deficit will depend on the inflow of revenues," Lavasa said.Below is the verbatim transcript of Ashok Lavasa’s interview to Sapna Das on CNBC-TV18.Q: Recently we have done a supplementary of almost Rs 21,000 crore odd. You have also cleared the 7th pay commission arrears in one short. If you look at the cumulative spend basically, you are already looking at a supplementary of Rs 21,000 crore plus the arrear thing, a spend of almost Rs 45,000 crore to that extent has already happened. How do you see the rest of the financial year going? Will you still be within your fiscal deficit target?A: We have done all our calculations and we find that the supplementary of course are for those programs and projects where it was absolutely necessary, where the level of spending has been very good. These are the social welfare programs, crop insurance schemes, Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). So, these schemes are very important we have presented it to the parliament and we are quite confident that with these additionality in the expenditure we should be able to maintain our fiscal deficit targets.Q: One more quick question here, you are heading the committee that is looking into the allowances structure of the pay commission. October sometime the report is expected what is the game plan after that. Most likely we are getting to hear that it will be implemented in the next financial year onwards but there will also be an additional cost to keep in mind. How do you see the situation panning?A: Today the committee is having its first meeting, so the committee will decide for itself the road map that it wants to follow. The methodology that it will follow and of course the time span is already known within which the committee is expected to give its report. It will go through various stakeholders, consultation etc so all that will happen. As I have said in the past when the Budget was made for this year the financial implication of the 7th pay commission were known because they are contained in the report. So, the Budget makers had this impact in their mind when they did their allocations. Q: GST is landmark tax reform so to speak do you think this could pose some kind of a fiscal challenge because next year onwards that much of compensation may also have to be kept aside in the finance bill?A: That is a commitment which is proposed to be made that the government of India will compensate the states. So, that is an expenditure which we are prepared for. The extent of its impact on the fisc will be in relation to the revenues that we earn. So, per se it cannot be said that this is a liability which the centre finances cannot afford. So, we will assess that impact after assessing the inflow of revenues in the Budget.