Economic Affairs Secretary Subhash Chandra Garg is at his convincing best when he brings up the government's track record of managing fiscal numbers. He told ETNow's Supriya Shrinate that the government is on the right track on the revenue front.Edited excerpts:You have just cut borrowing target by Rs 70,000 crore. Where is the confidence coming from, given that you have said there will be no expenditure cut? Are you confident and are you betting too big on small savings collections that will continue to go up and you will be able to take a healthy percentage of funds from small scale savings to manage your expenditure? Is not that too big a bet, I mean, where is the comfort coming from?So, let me just give you a broad idea of this. Our gross borrowing programme was about Rs 6,05,000 crore. Our net borrowing programme is Rs 3,90,000 crore. Our gross borrowing programme besides, including the repayments and redemptions, also had an element of buyback. We had planned about Rs 72,000 crores of buyback this year. Recently, the small savings rates were revised. So, we are expecting some additional flows into the small savings. Taking all these two together, we worked on reducing the buyback programme. We decided on reducing the borrowing programme by Rs 70,000 crore. It does not affect our financing of fiscal deficit at all, which is on a net basis. On the revenue front, we are doing all right. There are some components which might be somewhat lower than the estimates, but then there are others like direct taxes and non-taxes which are doing much better than expected and therefore, on the whole, we are confident.Liquidity conditions in the markets have been tight in recent weeks due to various issues, but the regulator and you yourself at North Block will have to continue to provide liquidity to the market. Which is why the question is: Do you anticipate further hardening of yields in the second half as inflation and interest rates also move up? And if I may voice a fear of the markets that could you increase borrowing in the last quarter or will off-budget borrowings from PSUs be done because that is what markets are weary of?So, let me again very clearly state that we do not do this kind of budget borrowing which you are hinting at. We will not do it this year as well. There is no likelihood at this stage of us revising to increase the borrowing programme later on. As I said, we are not cutting on the fiscal deficit financing borrowing programme. We are only cutting on the buyback and the additional flows which we are taking from the small savings account. On your questions about liquidity, that is a real issue, which has arisen in the last couple of days here in our country. In our judgement, liquidity situation requires some more sort of provision on a durable basis. We are working with the regulator and all to increase that liquidity. The regulator has taken some measures already to increase the liquidity. We would expect and work to get some more. There is another element of liquidity where the market participants start taking certain decisions in a manner where they become risk averse, which also creates problems about liquidity. That is where I think I would like to believe that our markets are fundamentally very safe, secure.There are some issues which arose and are very temporary. Those would be taken care of and therefore liquidity psychologically and actually should improve, going forward, which will bring order and normalcy to the market. Market is wary of fiscal slippage. The finance minister has said there will be no cut in government expenditure. You will be short by about Rs 1,50,000 crore as far as the GST target is concerned. At the same time, with the whole issue of the rupee depreciation, you will have to pay higher subsidy burden, which is going to go up. So your expenditure is going to rise. How are you going to convince the markets that the 3.3 per cent will be met because they are weary of the fact that the maths does not add up?See, there are always some people who go for extreme in their assumptions about things. I cannot quarrel with them and one cannot really satisfy their sense of extreme uneasiness. What to my mind should matter and convince people is our performance in the first six months. We have managed the fisc in a completely normal manner. The fiscal deficit this year is lower than it was last year and this has given us confidence. You would remember last year when we did our second half borrowing programme. We did not announce the six-month programme last year. We announced only three-month programme and we said that we will take an assessment again in the month of December. Then we did another meeting and came up with the programme for the last three months. So I do not think we will do any thing irresponsible because we know for sure that in case these numbers do not turn out to be the way we are projecting we will have a problem in hand. And going clearly towards the end of the financial year and thinking that there would be a problem which we will create at that time is to my mind not a very elegant way of even thinking about it. We had done our maths right. We have our tools, we have our means and therefore, I am quite convinced and assured that these fiscal outcomes would come the way we have projected.I understand that you would not want to bring upon yourself something that you will have to deal with in the last quarter. But despite two sets of measures that government announced -- one with the prime minister in the saddle and now with the finance minister announcing all kinds of things, the five policy prescription, the import duty restrictions, the visible impact both on the rupee and the market is not desirable, and that worries many stakeholders. The markets have lost nearly 2,500 points in September alone. There has been a significant erosion of investor wealth. Are these points that worry you? Why do you think the markets and the rupee are not listening to the commentary and are not reading into the actions that North Block or even RBI is taking?There are several forces which work at a point of time and we are not in control of all of them. These are like some global developments, some uncertainty related to what will happen in November about Iranian oil and some events that took place completely unconnected with oil and rupee in the NBFC space. So there are all these factors working at a point of time. Despite that, in my sense, the rupee has been reasonably stable over the last four five days. It is not displaying what we saw when it went down from 69 to 72. And my sense is that the measures which the government announced, both on the current account as well as on capital account are bringing some credibility to the players and some real assurance that possibly you are at a stage where unless some bigger events takes place elsewhere, we are coming to a steady state kind of situation. And that is where I think the measures on the current account announced in the form of the import duty enhancement on certain items aggregating about $15 billion will have their material impact.
from Economic Times https://ift.tt/2QcPMuK
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