Sticking to fiscal deficit target important: CEA KV Subramanian

Chief Economic Adviser KV Subramanian on Thursday stressed that the government should stick to the fiscal consolidation path or risk crowding out investment due to large public borrowings.

The Economic Survey, tabled in Parliament Thursday, pegged the fiscal deficit for 2018-19 at 3.4 per cent of the GDP, the same level as projected in the interim Budget.

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It is important to stick to fiscal deficit path, otherwise there is risk of crowding out of investment, Subramanian told reporters here.

The government resorts to market borrowings through government securities and treasury bonds to meet the gap between expenditure and revenue, popularly known as fiscal deficit.

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While the Survey has retained the fiscal deficit estimate for 2018-19 at 3.4 per cent, the general fiscal deficit — Centre and states combined — has been pegged at 5.8 per cent in 2018-19, down from 6.4 per cent in the previous fiscal.