Have buffer for external shock, 8th pay panel needs: Manoj Govil, Expenditure Secretary
expenditure secretary Manoj Govil tells ET in an interview. Edited excerpts:
Budget with ET
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Expenditure growth is quite muted this budget. What is the rationale here?
We have to look at it from a long-term perspective. The fiscal deficit used to be below 4.6% before the Covid. When Covid crisis came it went up to 9.2% which was not sustainable and not in line with the FRBM(Fiscal Responsibility and Budget Management Act). But it has come down since then and has been budgeted at 4.4% of GDP for next financial year. The finance minister has announced in the budget that we will transition on the path of reducing our debt to GDP ratio. Right now, we are around 57% and in the next few years, we hope to arrive at around 50%. We have shown that fiscal prudence is there. But it is correct to say that lower fiscal deficit also means that expenditure has to be rationalised.
Have you factored in any future shock or the requirement arising from the eighth pay commission?
Of course. The reason that we were able to go to 9.2% immediately in the Covid scenario was because of prudent fiscal policy and efficient macroeconomic management. The fiscal buffer built over the past years helped us boost the expenditure quickly when the need arose. So our fiscal consolidation will also boost the resilience of the
