Debt, deficit situation in India seems better than many advanced, emerging economies: SBI

Improvement in debt and deficit situation, lowering fiscal deficit and the rupee gaining against the dollar in the forex market has made some favourable moments for the newly appointed Modi 2.0 government and at macroeconomic levels, captains of commerce are talking about the various priorities and goals that the new central government may set in coming days.

Speaking on the debt and deficit situation helping the new government Dr Soumya Kanti Ghosh, Group Chief Economic Adviser at SBI said, "Various macro indicators over the last few years show there has been a marked improvement. The debt and deficit situation of India seems better than many advanced and emerging economies. Importantly, India has undergone structural changes including demonetization (Nov’16) and GST (Jul’17) and is still stabilizing. Post these developments, there has been a visible increase in the number of taxpayers." 

Ghosh went on to add that in FY18, the total number of taxpayers increased to 7.41 crore from 6.92 crore in FY17 and 6.15 crore in FY16. The number of persons filing returns also increased to 5.43 crore in FY18 compared to 4.47 crore and 3.90 crore respectively in the previous two years. However, the number of e-filings which rose significantly between FY16-FY18 declined marginally in FY19 by around 6.6 lakh. Against this backdrop, Indian policymakers have taken a fiscal consolidation path to reach a target of 3 per cent in FY21 as suggested by the FRBM committee. 

"In FY19 the Government has been able to meet the revised fiscal deficit estimate of 3.4% of GDP. However, there has been Rs 1.45 lakh crore reduction in expenditure exactly matching Rs 1.57 lakh crore reduction in total receipts. Now that FY19 estimates are revised, FY20 estimates might seem to be on the higher side," said the Group Chief Economic Adviser of SBI.

Talking about the global challenges for the Indian economy Ghosh said, "On the global front, world trade tensions have been intensifying this past year, with President Trump announcing protectionist measures one after the other. This has led to extreme volatility in the markets as global growth prospects are threatened to owe to slowing trade. Crude oil prices have also been sliding since US announced that it will impose tariffs on China and then Mexico."