India is unlikely to meet the 4.6% fiscal deficit target for the financial year ending March 31, Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan said here today.
"Perhaps this is difficult to achieve [fiscal deficit target of 4.6% for this fiscal]," Rangarajan said while delivering the ASSOCHAM Foundation Day lecture on 'The Indian Economy: Concerns and Prospects'.
He further added that to gain credibility, it is important that fiscal deficit remains close to this level".
Over the medium term, the government should draw up an appropriate road map to reach the FRBM (Fiscal Responsibility and Budget Management) target of 3% of GDP, Rangrajan said.
"We must focus particularly on reducing the overall level of subsidies as a proportion of GDP," he added.
The government's fiscal situation has shown deterioration at the end of the first nine months of the current financial year, mainly due to poor realisation of non-tax revenues and also the government has so far managed to raise Rs 1,145 crore this fiscal from disinvestment against a target of Rs 40,000 crore.
According to the Controller General of Accounts (CGA) data, the government's fiscal deficit went up to Rs 3.81 lakh crore, or 92.3% of the Budget estimates at the end of December.
The Centre's fiscal deficit -- gap between overall expenditure and receipts -- was 45% of the estimates in the same period last year.
Rangarajan further said the mismatch between Current Account Deficit and capital flows has put pressure on rupee, which has weakened against the US dollar.
"The current account deficit in the current year may turn out to be higher than last year...Efforts must be made to keep the CAD around the manageable level of 2.5% of GDP," Rangarajan said.
