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Crucial data on the Centre's fiscal deficit for the first four months of the current financial year is likely to come out today. Already, it has touched 48.8% of the Budget Estimates (BE) in the first three months.
Finance Minister P Chidambaram has already said that the Centre's fiscal deficit at 4.8% of GDP in the current financial year is a red line which will not be breached.
Now, fiscal deficit at Rs 5.42 lakh crore is pegged in the Budget. Given the fact that real GDP growth is not expected to breach 6% this financial year and the wholesale price inflation might also remain at 6% on an average, the nominal economic expansion may not cross 12%.
However, in the Budget the growth was pegged at 13.5% in 2013-14 over the previous year. With lower growth, any given fiscal deficit in absolute terms will look larger as percentage of GDP. Besides, there is likely to be an impact of slowdown in growth on tax receipts.
Revenue deficit, a gap of the government’s current expenditure over current receipts, has already crossed the half-way mark as it stood at Rs 2.10 lakh crore in the first quarter of 2013-14, 55.4% of the BE of Rs 3.79 lakh crore. By the end of the first quarter of 2012-13, the revenue deficit stood at 43.6% of the BE.
Revenue deficit is projected to come down to 3.3% of GDP in 2013-14 against 3.6% in the previous financial year.
