It expects the revenue gain from these measures to offset, to a large extent, the additional expenditure on account of subsidies and the revenue loss from excise duty cuts.
“We will stick to our borrowing target. Recent revenue changes, change on GST rates and health tax collection will cover largely for the extra subsidy bills,” an official told ET.
The Centre’s gross borrowing for fiscal 2023 is pegged at ₹14.95 lakh crore.
Another official said the government was committed to the fiscal deficit target of 6.4% of gross domestic product for the current financial year.
There were apprehensions that the Centre may breach its fiscal deficit target due to excess subsidy payments.
The government has budgeted ₹2.07 lakh crore for food subsidies in FY23, lower than the revised ₹2.86 lakh crore for FY22. But the extension of the Pradhan Mantri Garib Kalyan Anna Yojana for six months to September is expected to swell the subsidy bill to about ₹2.87 lakh crore.
The fiscal deficit for April-May, the first two month of FY23, was ₹2.03 lakh crore, or 12.3% of the target for the full financial year, mainly due to higher expenditure, according to the official data.
The official acknowledged that the current account deficit may go up, but said, with strong macroeconomic fundamentals and foreign exchange reserves, India would come out of it.
“When the oil prices are that high, obviously the current account deficit will go up,” the official said. In the last several years, India had been bridging the CAD with capital inflows, but this year, there is a headwind on capital flow, the official added.
India’s foreign exchange reserves increased by $2.734 billion to $593.323 billion in the week ended June 24, the Reserve Bank of India said on Friday.
The government is taking steps to deal with spiralling crude oil prices in the international market, people in the know said. India imports 85% of the crude it requires and a weaker rupee has made imports costlier.