The government will miss its fiscal deficit target by a wide margin, and the deficit will increase to at least 5 per cent of GDP this fiscal due to the stimulus package, chief economic adviser Arvind Virmani said today.
"We already have a very substantial stimulus package this year... Two per cent is the fiscal deficit expansion," Virmani told reporters after the mid-year review of the economy was tabled in Parliament.
The government had, in Budget 2008, targeted fiscal deficit to come down to 2.5 per cent of GDP this fiscal although it was expected to be 3 per cent under Fiscal Responsibility and Budget Management (FRBM) Act.
Fiscal deficit has already touched 87.8 per cent of the target for the entire fiscal till October.
The government recently approved an additional expenditure of Rs 42,480 crore during the current financial year. The amount includes Rs 20,000 crore given as fiscal stimulus and 4 per cent accross the board cut in excise duty.
The government has already sought an additional Rs 1,47,000 crore from Parliament as the first and second batch of supplementary demands for grants, raising public spending to Rs 9,00,000 crore from Rs 7,50,000 crore originally envisaged in Budget 2008-09.
On inflation, Virmani said it is fully under control and will come to an acceptable level of 5 per cent by the of the fiscal. Inflation eased to 6.84 per cent on December 6.