Fiscal deficit 1.25% of GDP

RUN UP TO THE BUDGET 2004-05

The fiscal health report card of the Centre shows that the fiscal deficit has touched 1.25 per cent of the GDP after the first two months of the fiscal year, compared to 1.07 per cent in the same period of 2003-04.

The data released by the Controller General of Accounts just eight days before the general Budget, shows that tax revenue collections till the end of May was lower than that of the last fiscal. It was 2.1 per cent of the Budget estimates for 2004-05, against 2.6 per cent in 2003-04.

However, the situation has improved after the advance tax collections in June. The government has also done better on the non- debt capital receipts logging 6.7 per cent of the Budget estimates, against 4 per cent in 2003-04.

In absolute terms, it has touched Rs 13,479 crore compared with Rs 4,100 crore in 2003-04. The rise is due to the whopping Rs 13,377 crore received as recovery of loans in this fiscal. On the expenditure side too, the pace of both plan and non-plan expenditure has sharply increased.

In the current fiscal, it stands at Rs 13,584 crore, against Rs 8,635 crore in 2003-04. This is a 57 per cent increase when compared with last year. Non-plan expenditure, too, has shot up to Rs 46,786 crore, against Rs 37,042 crore in the first two months of the last fiscal.

The increase in non-plan expenditure from last year therefore stands at 26.3 per cent. The rise is largely accounted for by the interest payments, which were Rs 19,860 crore, against Rs 14,198 crore earlier.

Because of the sharp rise in both plan and non-plan expenditure, the revenue deficit has crossed the fiscal deficit in absolute terms. The latter sits at Rs 43,812 crore, or 1.41 per cent of the GDP. The Budget estimate for GDP for the fiscal is 2.9 per cent.

In the last fiscal, taking into account the same period, the revenue deficit was 1.04 per cent of the GDP, at Rs 32,330 crore.

The deficit measures the extent by which the government's current revenue receipts have fallen short of the current expenditure, and to that extent, gives a push to its borrowing.

The government has had to resort to ways and means advances from the RBI for Rs 2,730 crore. The aggregate domestic borrowing of the Centre for the first two months sits at Rs 38,880. 63 crore. This is 30 per cent of the Budget estimate for the year.