Fiscal deficit may exceed estimates

Maintaining the fiscal deficit within Budget estimates could prove a tight rope walk for the government as the deficit in the first two months of the current financial year is almost half the year's estimated deficit of Rs 1,48,686 crore.

According to the monthly data released by the Controller General of Accounts, a step-up in plan expenditure has pushed up the fiscal deficit during April-May to Rs 72,088 crore, which is 48.5 per cent of Budget estimates.

An equally worrying feature is that the step-up in expenditure has caused the revenue deficit to shoot up. It was, Rs 68,620 crore up to May, which is 81 per cent of the estimate of Rs 84,727 crore.

The revenue deficit during April-May last year was just Rs 44,154 crore, which was 46 per cent of the year's estimate.

The fiscal deficit in the corresponding period last year was Rs 47,603 crore, which was just 31.5 per cent of the estimate for 2005-06.

The higher revenue and fiscal deficits are clearly on account of increase in plan and non-plan expenditure. Total expenditure during the first two months of the fiscal touched Rs 91,918 crore, which is 16.3 per cent of estimates, against 11.6 per cent achieved in the same period a year ago.

Plan expenditure increased to Rs 29,036 crore or 17 per cent of the estimate, compared with Rs 12,949 crore in the same period last year. Non-plan expenditure during April-May was Rs 62,882 crore, or 16 per cent of the estimate, against Rs 46,788 crore in April-May 2005-06.

The increase in expenditure has overshadowed the increase in revenue receipts at Rs 19,330 crore, accounting for 4.8 per cent of estimates, compared with Rs 11,944 crore up to May, last year.

Tax revenue during the first two months of the fiscal was Rs 15,087 crore, which is around 5 per cent of the Budget estimate, while non-tax revenue was Rs 4,243 crore or 6 per cent of the estimate.