Apr-July fiscal deficit at 85% of yearly target

India's fiscal deficit for the first four months of the current financial year touched 85.7 per cent of the Budget target.

During the corresponding period last fiscal, the figure was 58.1 per cent.

The deficit widened on account of the Rs 35,531-crore capital expenditure incurred by the Centre on acquiring the Reserve Bank of India's stake in the State Bank of India, the Controller General of Accounts said today.

The revenue deficit also rose to 115.3 per cent from 92.3 per cent during the corresponding period last fiscal.

Data on the central government's accounts till July 31, issued by the Controller General of Accounts, said the expenditure had largely been neutralised in August, when the RBI transferred the Rs 34,308 crore profit on the sale of SBI shares to the Centre. The book value of the shares is Rs 1,223 crore.

The fiscal deficit stood at 3.5 per cent for the entire 2006-07 financial year. The Fiscal Responsibility and Budget Management (FRBM) Act mandates the government to reduce the fiscal deficit, as a ratio of the gross domestic product (GDP), by 0.3 per cent every year.

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 FRBM Act.

However, Finance Minister P Chidambaram has expressed confidence 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.