Excise Duty Cuts On Fuel Poses Risk To Fiscal Deficit: Finance Ministry
NDTV
Government revenues have taken a hit following cuts in excise duties on diesel and petrol, posing risk to budget level of gross fiscal deficit
India faces near-term challenges in managing its fiscal deficit, sustaining economic growth, reining in inflation and containing the current account deficit while maintaining a fair value of the Indian currency, the monthly economic review released by Finance Ministry on Monday, said.
Government revenues have taken a hit following cuts in excise duties on diesel and petrol, posing risk to budget level of gross fiscal deficit, the report said, adding that that this, in the long run could impact the currency.
"Increase in the fiscal deficit may cause the current account deficit to widen, compounding the effect of costlier imports, and weaken the value of the rupee thereby further aggravating external imbalances, creating the risk (admittedly low, at this time) of a cycle of wider deficits and a weaker currency," the monthly report said.
It also noted that near-term challenges need to be managed carefully without sacrificing the hard-earned macroeconomic stability.
