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Thursday, July 7, 2022

Fiscal deficit is expected to increase due to reduction of duty on petrol-diesel, the burden of 1 lakh crore will be on the exchequer

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Excise Duty on Petrol-Diesel: In order to provide relief to the general public on the rapidly increasing petrol and diesel prices across the country, it was decided to cut excise duty. The central government’s decision to cut excise duty on petrol and diesel will put pressure on the fiscal deficit and it is expected to fall short of the target of 6.4 per cent. Experts have expressed apprehensions about this.

One lakh crore burden will fall on the government exchequer
Let us tell you that the government has cut the excise duty on petrol by Rs 8 per liter and on diesel by Rs 6 per liter. This will put a burden of about one lakh crore rupees on the exchequer.

What did the rating agency say?
Rating agency Icra said in a report that the risk to the fiscal deficit will increase in view of the lower than the budget estimate of the government’s dividend from the Reserve Bank of India (RBI) and the need to incur additional expenditure on food and fertilizer subsidies.

impact on fiscal deficit
Icra said, “We estimate that the fiscal deficit in the financial year 2022-23 may be 6.5 percent of the gross domestic product (GST), while its budget estimate is 6.4 percent.” would be contrary to the target of gradual reduction. The government has set a target of bringing down the fiscal deficit to below 4.5 per cent by 2025-26.

Know what the officials of Acute Ratings said
Suman Choudhary, Chief Analysis Officer, Acute Ratings and Research said that apart from cutting excise duty on petrol and diesel, changes in import-export rates on steel products will also have an adverse impact on the fiscal situation. He said that the situation may worsen in the future due to which the government will have to borrow more.

Bank of America released report
A report by Bank of America Global Research also said that the steps taken by the government in the last few days will increase the pressure on the fiscal deficit. According to this, the fiscal deficit can increase by 0.40-0.50 percent in the financial year 2022-23.

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