An internal assessment by the government shows that finance minister Yashwant Sinha will not be able to meet the fiscal deficit target for this fiscal, and not just because of pump priming the economy. Apparently, he has little choice because of poor revenue prospects.
In an assessment of the economic indicators, the Planning Commission has advised the finance ministry that with the GDP growth rate likely to be 4.7 per cent, the government should not insist on the targeted fiscal deficit of 4.7 per cent of GDP for the year. Instead, it has said a "strict adherence to the fiscal deficit target is likely to lead to containment of government expenditure in general and plan expenditure in particular".
Moreover, it says since the current GDP growth rate is substantially lower than the 6.5 per cent rate on which the Budget was based, even the same fiscal deficit in absolute terms (Rs 116,314 crore) "would result in higher fiscal deficit in percentage terms".
The assessment also says that last month
