Budget tomorrow, Jaitley has task to keep fiscal deficit under control with more spending

New Delhi: The Budget for Financial Year (FY) 2018-19 will see the balancing act to keep the fiscal deficit and inflation under control along with the increased government expenditure to give boost to GDP and job creation.

As per the data released by Government and other Agencies in recent past, it is evident that the Private investment has not picked up as per the expectations inspite of the fact that Government did a lot to encourage it through a large number of reforms. Due to this, desired number of jobs has not been created which is a major concern for the government.

And the problem for the government is that this year budget will be last full budget for the government as the general election is to be held in next 15 months time and Opposition is making job creation a big issue. Even during the Gujarat state assembly election Congress president Rahul Gandhi made it the main issue and has indicated that it will be the main issue in the next general elections.

In the absence of the private investment, to give a boost to GDP and job creation lies with the government expenditure. So for both the things, Government need to allocate more money in the coming budget in almost all the sectors which may increase the fiscal deficit which in tern discourage the Foreign Direct Investment (FDI).

This will be contrary to policy of the government looking for the more FDI which is evident from the fact that it allowed even 100 per cent FDI in retail in case of single brand. One can understand the government keenness over FDI from the decision of allowing 49 per cent FDI even in national carrier Air India.

For almost 4 years, Modi Government was fortunate that crude oil prices were under control which allowed huge revenue to the exchequer. It allowed more government expending in various sectors as there were huge saving on this front. But, the scenario has reversed and crude oil prices in International market have moving towards 70 dollar per barrel against the government expectations of maximum 60 dollar per barrel.

This has put pressure on the government as the retail prices for petrol and diesel have reached new high in domestic market giving a fresh rise in inflation. Inflation has crossed to 5 per cent. This require tax reduction in petroleum products and if government does so, the revenue will again shrink making less availability of resources for other sector and plan budgets.