Fiscal slippage, oil prices not immediate worry, says Jaitley

Finance Minister Arun Jaitley on Saturday said he saw a robust revenue generation in fiscal 2018-19 that could help prevent any fiscal slippage in the coming year, a comment that could lift the falling equity market.

"As far as the fiscal situation is concerned, I see next year to be more comfortable as far as revenues are concerned. I cannot see at this stage that there would be any slippages," Jaitley said at a press conference after his customary post-Budget address to the Reserve Bank of India (RBI) and Securities and Exchange Board of India (Sebi).

He also took comfort in sliding crude oil prices in the past couple of days and said no assessment should be made based on hypothetical situation concerning crude oil prices.

"An assessment should not be made based on hypothetical situation concerning crude prices as the trend in the last three days has been opposite with prices falling again," Jaitley said.

RBI Governor Urijit Patel, however, said that India needed to be prepared for a two-way movement in the world crude oil prices.

"We need to be prepared for the movement of crude oil prices either way. A few months ago, in June or so people were talking about oil prices not going above $40-$45 per barrel. That has turned out to be wrong in a major way," Patel said reiterating the need to keep a strong vigil on that.

Bucking the trend, the Budget for 2018-19 has made no estimation of crude oil prices and its impact on the government deficit. Opposition has, however, raised the issue in Parliament asking the finance minister that if the crude rises to $70-$75, how would it impact his Budget estimates, especially the deficits? Would he raise the retail prices of petrol and diesel?

Patel also said that both RBI and Sebi needed to be conscious about the volatility in the equity market for risk assessment.

"In the last few days, there has already been a correction, not only globally but in India. Therefore in a way it underscores how capital markets can change direction. So far neither globally nor in India, it has been felt that this bubble could lead to a very major problem," Patel said.

On the credit growth for private investment in the coming year, Jaitley said there were indication of credit growth occurring and with bank recapitalisation, the lending would improve. He said, it was a good sign that there was now an increased reliance on capital bond market for credit rather than equity market.

Patel said the equity-debt ratio for corporates is expected to get better going forward as the capital markets have shown a good trend in terms of raising funds through bonds.