The government should take steps to reduce expenditures to check slippage in government finances though fiscal deficit is likely to come down to 4.1 per cent in 2012-13.
The Economic Survey 2011-12 tabled in the Parliament by Finance Minister Pranab Mukherjee has projected the fiscal deficit, the gap between overall revenue and expenditure, to further narrow to 3.5 per cent in 2013-14 fiscal.
The government had fixed a fiscal deficit target of 4.6 per cent of Gross Domestic Product (GDP) for the current fiscal, but it has already overshot the estimates in January. It is widely expected that the deficit for the current fiscal will be around 5.5 per cent.
As per the survey, the provisional estimates of Centre's Resources indicate that the fiscal deficit will be 4.1 per cent in 2012-13, 3.5 per cent (2013-14) and 3 per cent (2014-15, 2015-16 and 2016-17).
"Going forward there is a need to anchor fiscal consolidation on structural reforms in expenditure," the survey said.
It said that with lower-than-expected growth in revenue receipts, slowdown in industry, rising costs and additional expenditure on account of stickiness in high global commodity prices, there has been slippages in the government finances.
"Besides, the financial market conditions were not appropriate for going ahead with the scheduled disinvestment plan. As such, a slippage on the targets of the deficit indicators is likely though efforts are afoot to minimise them," it said.
This is essentially an exceptional year when a whole host of factors have turned out differently than envisaged at the time of presentation of the (last year's) Budget, it said.
The survey said that fiscal consolidation is taking place across nations since 2010 and India's fiscal deficit has been amongst the highest in 2010 and 2011.
"In India's case, a larger correction is needed in terms of key fiscal indicators," it added.
