Govt committed to 6.4% fiscal deficit target for 2022-23

India's macroeconomic fundamentals are strong to deal with global challenges and the central government is committed to sticking to the fiscal deficit target of 6.4 per cent of the GDP for the current fiscal, official sources said on Monday.

The government is taking steps to deal with the spiralling crude oil prices in the international market, the sources said.

India meets nearly 85 per cent of its oil demand through imports and a weaker rupee makes imports costlier.

Commodity prices, including of crude oil, are ruling high due to the ongoing Russia-Ukraine war and have led to inflationary pressures across countries, including India.

The government is committed to adhering to the fiscal consolidation path and the Budget this year has pegged the fiscal deficit at 6.4 per cent of the GDP, sources said, adding that steps are being taken to address the situation arising out of rising crude oil prices.

While acknowledging that there are strong global headwinds, the sources said the country's macroeconomic fundamentals are strong enough to deal with challenges.

Sources said that the current account deficit (CAD) is expected to be high as crude oil prices are high.

For the past several years, sources said, India had low CAD but this year there is headwind on that front.

However, the macroeconomic situation and forex reserve are better than in the past.

On the rupee depreciation, sources said the dollar is appreciating vis-a-vis all other currencies and appreciation vis-a-vis rupee has been the least among the peers.

There is no comfortable level for the rupee in mind but market forces would decide the stable value, sources said, adding that monetary authority does intervene in the forex market to smoothen out sharp volatility.

Asked about the government's recent measures to impose taxes on fuel and gold, sources said the government is taking a part of the windfall profit from unexpectedly high prices.

The government imposed a Rs 23,250 per tonne tax levied on crude oil produced domestically.

The domestic crude producers sell crude to domestic refineries at international parity prices.

As a result, domestic crude producers are making windfall gains.

Taking this into account, a cess of Rs 23,250 per tonne has been imposed on crude. Import of crude oil would not be subject to this cess.

Additionally, a Rs 6 per litre tax on the export of petrol and ATF and Rs 13 per litre tax on the export of diesel is effective from July 1.

On the revenue mobilisation from these measures, sources said, it is difficult to put a number.

Calculations are based on assumption, sources said, adding that no one can say what would be the price of crude oil tomorrow.

Sources also said that curbs on exports of some items have been imposed to cool down prices in the domestic market.