Fiscal deficit still in comfort zone

TAKING THE PULSE OF INDIA'S FINANCIAL HEALTH

At Rs 96,274 crore, it is 63.8 per cent of the Budget estimate.

In an indication that the central government has managed to keep its expenditure under control even as a buoyant economy generates higher revenues, the Centre's fiscal deficit during April-November stood at Rs 96,274 crore ($24.44 billion) or 63.8 per cent of the Budget estimate for 2007-08. The fiscal deficit during the same period of the previous year was 72.8 per cent.

The central government aims to reduce its annual fiscal deficit to 3.3 per cent of gross domestic product (GDP) by March 31, 2008, down from 3.5 per cent in 2006-07.

Better-than-expected tax collections led to increased revenues. By the end of November, the government recorded receipts of Rs 2,74,633 crore, or 56.5 per cent of the full-year target of Rs 4,86,422 crore. This was marginally better (1.7 per cent higher) than the revenue receipts in the same period last year.

However, non-debt capital receipts, including loan recovery, showed an impressive growth, with 93.8 per cent of the Budget target achieved by November-end. During the same time in 2006-07, non-debt capital receipts stood at only 60.4 per cent of the Budget target. Total receipts stood at 59.5 per cent (Rs 2,98,756 cr) of the Budget target as against 55 per cent achieved during 2006-07.

Data issued by the Controller General of Accounts pointed out that total expenditure remained more or less at the same level as the previous year. While total expenditure till November this year was at 60.5 per cent of the Budget target, it was 59.7 per cent during the same period in 2006-07.

The revenue deficit also decreased to 97.9 per cent of the Budget target as against 99.7 per cent during 2006-07.

The Prime Minister's Economic Advisory Council had earlier expressed concern over rising expenditure resulting into high revenue deficit. It had doubted whether the revenue deficit would be eliminated by 2008-09 as required by the Fiscal Responsibility and Budget Management Act.

However, Finance Minister P Chidambaram has expressed confidence that the Budget estimates will be met. The Budget for 2007-08 estimated that the revenue deficit would decline to 1.5 per cent of GDP this fiscal, from 2 per cent in 2006-07.