The fiscal deficit target of below 4.5 per cent by FY26 is achievable and the strategy to achieve it will be through sustained high revenue growth, strict control of avoidable and unproductive expenditure and fast GDP growth, according to TV Somanathan, Finance Secretary.

He underscored that the Budget has reiterated the commitment to reach fiscal deficit below 4.5 per cent by FY26. “The strategy to reach it will involve three things — first, sustained high revenue growth with decent buoyancy (on the revenue side), second, sustained and strict control on avoidable and unproductive expenditure, especially non-scheme revenue expenditure (on the expenditure side), and the third is through various measures taken in the Budget to keep the denominator (GDP) growing fast. We think, this is achievable,” Somanathan said.

The Finance Ministry team led by Finance Minister Nirmala Sitharaman and comprising Ministers of State — Bhagwat Karad and Pankaj Chaudhary, Secretaries — Somanathan, Ajay Seth, Sanjay Malhotra and Tuhin Kanta Pandey, and V Anantha Nageswaran, Chief Economic Advisor to the Indian government, was in Mumbai as part of their Budget outreach programme..

In her budget speech on February 1, Sitharaman, said, “The fiscal deficit is estimated to be 5.9 per cent of the GDP. In my Budget Speech for 2021-22, I had announced that we plan to continue the path of fiscal consolidation, reaching a fiscal deficit below 4.5 per cent by 2025-26 with a fairly steady decline over the period. We have adhered to this path, and I reiterate my intention to bring the fiscal deficit below 4.5 per cent of GDP by 2025-26.” 

Insurance policies with very high value

On the Budget proposal that limits tax exemption from proceeds of insurance policies with very high value, Sitharaman said, “In this case tax is being levied on annual premium, which is over a certain number (₹5 lakh)…Insurance penetration, as I imagine, is to deepen the insurance cover available (penetration) for India and accessible for Indians.

”Majority of our population is not yet fully covered…it not on the back of ₹5 lakh per annum premium that a person pays that the penetration can happen,” the Minister said.

Sitharaman said there is no restriction on the number of insurance policies one can take. “But if one is able to pay that kind of a premium, what would be your salary? So, please look at it from that point of view than conflating two different things. This is not going against insurance deepening. We want more people to get covered. But let us also be looking at some other factors going into it,” she said.