Fiscal deficit increases 42% on high spend

Finance ministry orders mandatory 5% cut in all non-Plan expenditure.

Increased Plan and non-Plan expenditure has offset a modest increase in revenue receipts, causing the fiscal deficit to touch Rs 77,740 crore in the first quarter, 52 per cent of the Budget estimate of Rs 1,48,686 crore. The deficit is also 42 per cent higher than the deficit of Rs 54,571 crore during April-June 2005-06.

Meanwhile, the finance ministry has ordered a mandatory 5 per cent cut in all non-plan expenditure and cutting down of other expenses including a total ban on purchase of new vehicles. The measures also include restrictions on foreign travel by officials and more purchases through e-procurement.

The marginal growth in revenue receipts has also put pressure on the revenue deficit, which spiralled to Rs 70,675 crore, 83.4 per cent of the Budget estimate, in the first three months of the fiscal. This is 49 per cent higher than the revenue deficit of Rs 47,311 crore during April-June 2005-06 , which was around 50 per cent of that year's Budget estimate.

"We must look at the larger picture. We have to look at the cash balance. We will try our best to meet the fiscal deficit target," a finance ministry official said.

The pressure on the fiscal and revenue deficits is mainly because of expenditure touching Rs 1,31,470 crore, 23 per cent of the Budget estimate and a 40 per cent jump over the previous corresponding period.

The total expenditure of Rs 93,584 crorein the first quarter of the previous fiscal accounted for just 18 per cent of the Budget estimates.

Plan expenditure increased to Rs 38,524 crore accounting for 22 per cent of the Budget estimate, while the non-Plan expenditure increased to Rs 53,730 crore, 13 per cent of the estimate.

Revenue receipts during April-June touched Rs 52,382 crore, 13 per cent of the Budget estimate. Of this, the tax revenue was Rs 44,463 crore, which was 13.6 per cent of the estimate. The tax revenue during April-June 2005-06 was Rs 31,668 crore, which was 11.6 per cent of the Budget estimate.

The total receipts, which included non-debt capital receipts, were Rs 53,730 crore, 13 per cent of the Budget estimate. The total receipts during the first quarter last year were Rs 39,067 crore, accounting for 11 per cent of the estimates.