Finance Minister Nirmala Sitharaman is scheduled to address the post-budget meeting of the RBI’s central board on Monday (July 8) and highlight the key points of the Budget, including the fiscal consolidation roadmap.
The government has lowered the fiscal deficit target to 3.3 per cent of the Gross Domestic Product (GDP) as it is expecting net additional revenue of ₹6,000 crore over the interim Budget estimates. The government in the interim Budget in February had projected a fiscal deficit of 3.4 per cent of the GDP for the current fiscal.
The Centre also came out with a roadmap to reduce the fiscal deficit – the gap between total expenditure and revenue – to 3 per cent of the gross domestic product (GDP) by 2020-21, and eliminate the primary deficit. Primary deficit refers to the deficit left after subtracting interest payments from the fiscal deficit.
The Finance Minister would also apprise the board of various other announcements made in the Budget to spur growth by touching almost all sectors of the economy with the objective of achieving a $5 trillion economy by 2024-25, said an official. The Budget also announced further opening up of aviation, insurance, and media sectors to foreign investment while throwing a lifeline to the struggling shadow banks (NBFCs) to boost investment and lending in the economy.
It has also proposed measures to improve NBFCs access to funding by providing a limited backstop for the purchase of their assets. The government will provide a partial guarantee to state banks for the acquisition of up to ₹1 lakh crore of highly-rated assets from non-banking finance companies.
The Reserve Bank of India has been made regulator of housing finance firms as well, replacing the National Housing Bank. With regard to surplus transfer from the RBI, the Budget envisages ₹90,000 crore as dividend from the central bank in the current fiscal. This will be 32 per cent higher from the previous fiscal, when the central bank paid ₹68,000 crore to the government, including ₹28,000 crore as interim dividend.
This was the highest receipt from the Reserve Bank in a single financial year, exceeding the ₹65,896 crore received in 2015-16 and ₹40,659 crore in 2017-18. The Reserve Bank follows the July-June financial year and usually distributes the dividend in August after annual accounts are finalised.