Finance Minister Arun Jaitley on 10th February 2018 showed strong confidence that there will be no more fiscal failures as the financial position is likely to be comfortable from the next fiscal. Brushing aside any immediate need to worry about rising global oil prices, Mr. Jaitley said an assessment should not be made based on the hypothetical situation concerning crude prices as the trend in the last three days had been the opposite (with prices falling again). He added that at this stage he was not worried about any failures on the fiscal front. In a press conference after meeting RBI’s board in a customary post-Budget exercise, he also said that the last decision of the Monetary Policy Committee, chaired by RBI Governor Urjit Patel, to keep interest rates unchanged was a “balanced decision”.
Mr. Jaitley said that as far as fiscal situation is concerned, he sees next year to be more comfortable as far as revenues are concerned. The finance minister in Budget 2018-19 projected a higher fiscal deficit of 3.5 percent of the GDP for the current fiscal, as against the target of 3.2 percent, on account of GST implementation and deferment of spectrum auction. The fiscal deficit or gap between total expenditure and revenues has been decided at 3.3 percent for the next fiscal as against the Fiscal Responsibility and Budget Management (FRBM) Act mandate of 3 percent.
With regard to the Budget proposal of fixing the minimum support price (MSP) of kharif crops at least 1.5 times that of the cost of production, Jaitley said that this issue was discussed because it takes place in the light of the Budget. With regard to long-term capital gains tax, the finance minister said it was not part of the meeting but was discussed in Sebi’s board meeting.
Asked about the rate of transmission by the banks, Mr Patel said one of the banks reduced its Marginal Cost of funds-based Lending Rate (MCLR) two days ago. He also added that in terms of transmission if you measure since the easing cycle started by MPC and you compare the MCLR now actually there has been good transmission.