While the government routinely cites the great fiscal turnaround that has been made, at both the Centre and in the states, the IMF begs to differ. Its latest report, after its Article IV consultation, puts the central fiscal deficit at 1.2 percentage points higher (in per cent terms, it's up by 36 per cent) than what the official estimate is. The IMF has done this by adding back to the official deficit numbers the value of the oil (0.8 per cent of GDP) and fertiliser (0.3 per cent) bonds that are being issued. Even this could be an understatement since it does not include the subsidy the oil companies are bearing on the government's behalf. Based on this revision, there has been virtually no fiscal correction for the country as a whole over the past few years. Add to this the fact that corporate profits growth has slowed (this is where the major buoyancy in collections has come from in the past few years) and that SEZ tax exemptions could rise to 1.5 per cent of GDP according to IMF estimates, and things don't look as rosy anymore.  |
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