The Centre will miss the fiscal deficit target of 3.3% of gross domestic product set in the budget for the current financial year, a top policy adviser said on Thursday, adding that he believes the government will cut personal income tax rates. Bibek Debroy, chairman of the Prime Minister’s Economic Advisory Council, told a website in an interview that he expects fiscal deficit to rise since the growth rate envisaged in the budget may not be realised. Debroy said there could be a substantial reduction in income tax rates.
While he did not say when the cut was expected, he said logic of the corporate tax cut, announced last month, suggested that it could. The economist said he believed the way in which GST has been implemented was a major factor behind slowing down of the economy. He said it was impossible to statistically say what percentage of growth has been affected by GST but he made it clear that in his mind there was no doubt that GST was a major cause of the slowdown. Debroy said it was the right time to rationalise rates. He also said all exemptions should end. When asked whether this might be risky in the present environment, when GST collections are at a 19-month low, he said this was the right time to do it.