Q: The fiscal deficit target for 2019-20 continues to remain the same as this year at 3.4 percent of GDP. How do you plan how to avoid fiscal slippage, considering the expenditure on farm income support plan? How do you plan to reach fiscal deficit of 3 percent in 2020-21, since the income support is not restricted to the next financial year?
Garg: Meeting the fiscal deficit target 3 percent of GDP in 2020-21 is a statutory obligation. The FRBM (Fiscal Responsibility and Budget Management) Act specifies that the government should bring the fiscal deficit down to 3 percent by 2020-21. This year, there is no slippage in my judgement. If you take two digits, fiscal deficit is going from 3.34 percent to 3.36 percent. That is minor. When we are going through the entire year, we might end up at 3.3 percent (in 2018-19). This small adjustment of Rs 2,000-3,000 crore is not difficult.
Next year’s target of 3.4 percent is what is being announced. It is based on additional requirement of expenditure taken into account. We will do another number crunching in July when the regular budget is presented. Let us see at that stage how much fiscal deficit remains. But the government has stated very clearly that we would remain on the glide path and in 2021 we will achieve 3 percent.
As far as the farm income support scheme is concerned, at this moment the programme has been announced and there is no expiry date. The target (of fiscal deficit of 3 percent of GDP by 2020-2021) will still be achieved.
Q: What is the real or inflation-adjusted GDP growth that you are assuming for 2019-20? Is it less than 8 percent?
Garg: Roughly speaking, we have done it on 7.5 percent of the economic growth and 4 percent inflation. There might be some adjustment between the two factors, but at this moment we expect the growth to be around 7.5 percent for 2019-20.
Q: The government has garnered Rs 35,532 crore as disinvestment proceeds as on January 29 as against the target of Rs 80,000 crore. With two months left for the financial year to get over, how do you plan to achieve the disinvestment target for 2018-19?
Garg: The number Rs 35,532 crore is up to December. If you compare it with the number last year, you will find this year’s number indicate healthier disinvestment process. In three months, during January to March, we hope to complete the remaining amount.
I won’t be able to specify particular companies (for disinvestment) as in some cases it will be market sensitive. But as and when the programme is disclosed, that would be made available. If something is done on through OFS (offer for sale), the department will declare if something is done on indexed fund.
If there are buybacks, then companies notify stock exchanges about buybacks. There are some buyback programmes going on in any case like IOC, ONGC. These are all going on and in public domain. The department feels it can make Rs 80,000 crore this year.
Q: How do you plan to meet next year’s disinvestment target, which has been further increased to Rs 90,000 crore?
Garg: See, there is a certain stock of the market capitalisation of the public sector companies. I think it is about Rs 13 lakh crore. Then you take care that you don’t go below a certain level. There is a surplus available that can be disinvested. The future targets depends on - 1) of that available surplus, how much equity you expect to disinvest. 2) Do you expect some strategic sale to take place.
I think there is enough of buyer power left and fixing a Rs 90,000 crore target next year is quite reasonable.
Q: We saw a surge in crude oil prices, earlier this year, which has now come to a comfortable level. What price of the crude oil did you consider while preparing the Budget? Moving ahead, what risk do you see regarding oil prices?
Garg: We don’t have to keep certain kind of prices in mind for the Budget in general. There are only two or three items in the Budget that have some correlation with oil prices. One of them is LPG subsidy and other is kerosene subsidy.
LPG subsidy relates to gas prices and not to oil. Kerosene is on its way out. The consumption is fast disappearing. We are left with only about Rs 2,500 crore of the liability per year for kerosene. This is reducing every year. That’s not a major item of concern any longer.
Regarding LPG, we have provided for current year in revised estimate as in the requirement. We have done the same for next year on price-based assumptions, provided for next time.
These are not big items at this point either. You saw volatility this year, despite that our estimates have gone up to Rs 25,000-29,000 crore.
Q: Why has the budgeted estimated a much-higher interim dividend from RBI?
Garg: We have received Rs 40,000 crore of the dividend for the year ending 2017-18. Now, we have an interim dividend coming up. For the current year’s income, which is relatively higher than last year’s income, based on both the foreign assets yielding more income to the Reserve Bank and also domestic assets yielding more income. We have taken into account Rs 28,000 crore, which is being in the Budget numbers as the expected dividend.
But this is not final. The final will depend on what is the RBI’s realised profit for six months what the RBI board decides. It may be higher or lower or the same. That I can’t say at the stage. Depends on what numbers come.
Q: Why do we not see a substantial jump in the budgeted estimates (BE) for revenue from GST for 2019-20 as compared with the BE of 2018-19? Does it mean that there is still some more time for GST to stabilise?
Garg: It only tells you the realism. If it tells Rs 5.03 lakh crore CGST (collection) this year and next year is more than Rs 6 lakh crore, the increase is about 40-50 percent. I think this is reasonable. GST is stabilising. But how much of it comes as CGST and how much as IGST, those things are stabilising in the process. There are also some adjustments in the previous years’ credit etc. This is now in a stabilisation stage.
Q: Why isn’t there a substantial jump in capital expenditure?Garg:
But still there is a real growth in capex (capital expenditure). There is a growth in comparison to the current year. There is some expansion on the revenue side thanks to schemes. Despite that capex is rising in real terms and is in positive terms. We have not only been able to protect the capital expenditure, but also have real increase in it.