Arun Jaitley, Urjit Patel address media after post-budget interaction

Finance Minister Arun Jaitley and Reserve Bank of India Governor Urjit Patel on Saturday said the movement of oil prices was uncertain.

But, the FM was confident that there would be no fiscal slippage next financial year, thanks to buoyancy in revenue.

Addressing journalists after the post-Budget interaction between the FM with the RBI board, Patel said decisions of the Monetary Policy Committee were forward-looking and not based on the day-to-day inflation rate. He added credit growth and the corporate debt-equity ratio was improving, and transmission of RBI policy decisions had improved since demonetization.

The government had demonetized Rs 1,000 and Rs 500 notes in November 2016. “We observed that in recent times oil prices had two-way movements. We need to be prepared for these movements because these are difficult to predict,” Patel said. He added some advisors had said a few months ago oil prices would not cross $ 45 a barrel. Global oil prices have cooled in the past few days, but concerns remain about potential headwinds.

Jaitley said the fiscal situation would be comfortable next financial year and there were no concerns about slippages from the deficit targets.

The Budget for 2018-19 has fixed the Centre’s fiscal deficit target at 3.2 percent of the gross domestic product, 2 percentage points higher than the consolidation road map.

For this financial year (2017-18), the government has revised the fiscal deficit target to 3.5 percent of GDP from 3.2 percent earlier, following revenue losses of Rs 350 billion due to the implementation of the goods and services tax.