The central government’s fiscal deficit has touched 7.88 per cent of gross domestic product (GDP) in the first quarter of this financial year, against just 2.28 per cent in the corresponding period last year. This may clearly undermine the finance ministry’s claims of reining in the fiscal deficit at the budget target level of 4.6 per cent of GDP for 2011-12, analysts said.
The budget estimate for this year’s fiscal deficit is just slightly less than the actual figure of the deficit at 4.68 per cent of GDP for 2010-11, but the first quarter figures for the two years vary significantly.
Crisil chief economist D K Joshi said the 4.6 per cent target would be difficult to achieve. “The deficit would not be below five per cent of GDP this fiscal,” he said.
| DEFICIT DETAILS | ||||
| Year | Q1 Fiscal deficit (Rs cr) | Q1 GDP (Rs cr) | Q1 Fiscal deficit as %age of GDP | Full financial year fiscal deficit as %age of GDP |
| 2009-10 | 124,302 | 1,437,489 | 8.64 | 6.29 |
| 2010-11 | 40,196 | 1,755,341 | 2.28 | 4.68 |
| 2011-12 | 162,653 | 2,061,940 | 7.88 | 4.6 (Budget estimates) |
The Federation of Indian Chambers of Commerce and Industry (Ficci) said it had an increasing apprehension of the government breaching the 4.6 per cent mark for the current financial year. “Based on robust scenarios, Ficci analysis suggests the fiscal deficit would be anywhere between 5.05 per cent and 5.12 per cent of GDP,” the chamber said. Adding, this estimate could be even higher in case the government is unable to stick to the budgeted expenditure target.
While a reasonable outcome would emerge if there was a check on revenue slippages and status quo on expenditure, the worst outcome would come about as a result of both revenue and expenditure slippages, Ficci said.
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However, the Prime Minister’s Economic Advisory Council believes the 4.6 per cent target is achievable, as revenues flow in towards the end of the year as well.
PMEAC chairman C Rangarajan said the expenditures so far are in line with the budget schedule, but ‘subsidies require further attention. “It is important to keep subsidies in check to achieve the fiscal deficit target,” Rangarajan said.
The deficit figures for July have also come and it showed the Centre’s fiscal deficit has already touched 55 per cent of the estimated gap between central expenditure and revenue for the entire year.
At this point of time during 2010-11, the fiscal deficit was just 23.8 per cent of the budget estimates for the entire year.
And, last year, the government received a whopping Rs 1 lakh crore from the sale of telecom spectrum for high speed mobile and broadband services, something not on the cards this year.