The country's fiscal deficit has ballooned to 6.0 per cent in 2008-09 from 2.7 per cent in 2007-08 even as the government stepped up spending to fight the global slowdown and geared up for the forthcoming elections. The UPA government's interim budget has projected a fiscal deficit of 5.5 per cent in fiscal 2009-10 despite stepped up spending in flagship programmes, rural development and housing.
The interim budget-2009-10 projects gross tax receipts of Rs6,71,293 crore and centre's net tax revenue at Rs5,00,096 crore for fiscal 2009-10, at the existing rates of taxation.
With revenue expenditure estimated at Rs8,48,085 crore, the revenue deficit amounts to 4.0 per cent of GDP. Fiscal Deficit is estimated at Rs3,32,835 crore, which is 5.5 per cent of GDP.
This would be lower than in 2008-09, but higher than would be appropriate under normal circumstances, acting finance minister Pranab Mukerjee said while presenting the budget.
However, conditions in the year ahead are not likely to be normal and, therefore, the high fiscal deficit is inevitable. We will return to FRBM targets once the economy is restored to its recent trend growth path, he added.
The current year is expected to end with a revenue deficit of Rs2, 41,273 crore as against the budgeted figure of Rs55,184 crore. Accordingly, the revised revenue deficit stands at 4.4 per cent of GDP against 1.0 per cent in the budget estimates.
Similarly, the fiscal deficit for 2008-09 has gone up from Rs133,287 crore in the budget estimates to Rs326,515 crore in the revised estimates. The revised fiscal deficit is estimated at 6 per cent of the GDP as against the budgeted figure of 2.5 per cent.
Non-tax revenues in the revised estimates are Rs96,203 crore, against the budgeted estimates of Rs95,785 crore for 2008-09, showing an increase of Rs418 crore.
The revised estimates of tax collection have been projected at Rs6,27,949 crore as against the budgeted estimate of Rs6,87,715 crore. This shortfall is primarily on account of the government's pro-active fiscal measures initiated to counter the impact of global slowdown on the Indian economy, he said.
A substantial relief of about Rs40,000 crore has been extended through tax cuts, including a fairly steep across the board reduction in central excise rates in December 2008. Despite this, it is expected that the tax collection in 2008-09 would exceed last year's collection.