Saying that the fiscal situation was less challenging last year, T V Somanathan stressed that the government will work on maintaining growth and fiscal stability, while the primary responsibility of controlling inflation lies with the Reserve Bank of India.
While the finance ministry is happy with strong tax collections on the back of a sustained economic recovery, the worry is that Covid-19 relief measures of the past six and a half months could take the fiscal deficit to 7.7 percent of GDP compared with a target of 6.8 percent.
The government said that a decision was taken to increase the subsidy for diammonium phosphate (DAP) fertilizer from Rs 500 to Rs 1200 per bag, an increase of 140 per cent.
The budgeted fertiliser subsidy for FY 2020-21 was Rs 71,000 crore. The additional amount takes total outlay to Rs 1.36 lakh crore for this year.
There is a cushion of around Rs 20,000 crore in FY16 Budget, which is expected to help the government tide over the additional expense on account of the Rs 12,000 recap package announced for PSU banks and the additional expense that will come in now OROP
Nobel laureate and Bharat Ratna, professor Amartya Sen is a votary of the Food Security Act. However, when asked whether he is proposing fiscal deficit to find the money for food security, the answer was "no".
CNBC-TV18's Ronojoy Banerjee learns that owing to proposals to remove customs duty on urea equipments and reduction of interest rate paid by manufacturers to government on foreign loans to 5%, the fertilizer department may have overestimated the cost assumptions in the urea policy.
While most analysts expect a rate hike pause by the RBI, here is one person who thinks otherwise. Speaking to CNBC-TV18 in an exclusive interview, Dr. Shankar Acharya of ICRIER says that the RBI is left with no choice but to hike rate, given the loose fiscal policy we have.
Fertilizer secretary Sutanu Behuria said the CoS had not submitted their report yet and expected the same to come within the next two months. "We have looked at two models but we had some reservations on its implementation. Thus, we are trying to do a few changes and see what we come up with."