FinMin calls for rationalising non-capex spends to avoid fiscal slippage
An upside risk to the budgeted level of gross fiscal deficit has emerged following cuts in excise duties on diesel and petrol, the Department of Economic Affairs (DEA) stated in its monthly economic review report for May 2022. The Ministry of Finance estimates a revenue loss of Rs.1 trillion due to the excise duty cuts. The DEA further stated that an 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 and creating the risk of a cycle of wider deficits and a weaker currency. Hence, the department believes that it is critical to rationalise non-capital expenditure (capex) spends for protecting growth supportive capex and for avoiding fiscal slippages.