"The central fiscal situation has improved but I think several underlying fiscal pressures are not entirely evident in the numbers," Reddy said at a programme organised by the National Institute of Public Finance and Policy. Fiscal deficit as a percentage of gross domestic product continues to be among the highest in the world, he added.
The government aims to reduce fiscal deficit to 2.5 per cent of GDP for 2008-09 from 3.1 per cent in 2007-08.
According to the Fiscal Responsibility and the Budget Management Act (FRBM), the government must reduce its fiscal deficit to 3 per cent of GDP and wipe out revenue deficit by 2008-09. However, it has already extended the revenue deficit target by one year till 2009-10. Revenue deficit is pegged at 1 per cent in 2008-09. [ends]
The recent fall in fiscal deficit could be because of reduction in public expenditure, as Reddy noted that there was a decline in public investment.
Experts fear the central government's Rs 71,680 crore farm debt waiver package and proposed salary hike may impact the fiscal numbers.
The fiscal situation of states' too had improved significantly, but they also have not factored in some underlying fiscal pressures, though not as much as the Centre, Reddy added.
