The payment for premature redemption of deep discount bonds of Sardar Sarovar Narmada Nigam Ltd (SSNNL) is anticipated to add to Gujarat's fiscal deficit for the current year. Gujarat government sees widening of fiscal deficit in 2008-09 due to the payment of funds for payment of bonds.
As per the revised estimates for the financial year 2008-09, announced by Gujarat's Finance Minister Vajubhai Vala in his interim budget speech, a deficit of Rs. 2,583.86 crore for the fiscal 2008-09 is anticipated.
The budget estimates of 2008-09 anticipated a fiscal deficit of Rs. 876.20 crore. But at the end of the year, the deficit is estimated to be Rs. 2,583.86. The increase in deficit is largely attributed to the payment towards early redemption of SSNNL's deep discount bonds.
Gujarat government has made provision of Rs. 2,720 crore for the payment towards redemption of deep discount bonds of SSNNL. So far the state government has paid Rs. 1,800 crore for bonds.
"The provision has led to increase in fiscal deficit. The deficit comes around 1.99 per cent of Gross State Domestic Production (GSDP). The deficit is well within the 3 per cent limit specified in the Fiscal Responsibility and Budget Management Act (FRBM)", government officials informed.