‘Revised GDP to check fiscal deficit to 3.1 percent in FY20’

He adds even based on the previous Gross Domestic Product (GDP) data, the government had missed the target this year by a mere 0.02 per cent which translates to a few thousand crores of rupees.

Subramanian also expresses satisfaction with the efforts taken by the government towards fiscal consolidation and said the country remained fiscally disciplined despite greater devolution of 42 per cent to states and implementation of the Seventh Pay Commission.

“The budgeted estimate for fiscal deficit (for FY19) was 3.34 per cent. The actual number has come to be 3.36 per cent. And as is the practice, it is rounded off to 3.4 per cent. So, actual slippage is 0.02 per cent which is just a few thousand crores,” the Chief Economic Adviser to the Finance Ministry told IANS in a post-budget interview.

He added the 3.36 per cent figure was derived based on the old GDP estimates and had not used the revised estimates which were released last Thursday.

The government had revised the GDP growth rates by 110 basis points from 7.1 per cent to 8.2 per cent for 2016-17 and by 50 basis points from 6.7 per cent to 7.2 per cent for fiscal 2017-18.

“If you use the revised GDP growth rate, we have calculated that the base would be Rs 225 lakh crore for the next year, which will bring down your fiscal deficit to 3.1 per cent,” he stated.

But, the CEA added, “We have to study those numbers before using them.” On the debate on lack of jobs in the economy, Subramanian said it was a problem on the demand side rather than supply. “Jobs are outcome of both demand and supply. We keep asking questions on the supply side – are we creating enough jobs? The demand side is actually having people who have ability to take up those jobs.

“It’s done through skilling, which, by its very nature, doesn’t happen overnight. It takes time. That’s where Skill India campaign and investments will start showing their results,” he said. Subramanian said fiscal prudence had been followed “very well” by the government.