Deficit won’t cross targeted 6.8 per cent: Ahluwalia

Planning Commission deputy chairman Montek Singh Ahluwalia has said India's fiscal deficit will not exceed the projected 6.8 per cent this year, in spite of increased spending on food imports and drought relief that is expected following the poor monsoon.

Rain deficit in the June-September monsoon season is feared to impact crops including rice and sugar, and has already sent food prices up by over 10 per cent from the previous year.

In July, the government had projected the fiscal deficit for 2009-10 to be 6.8 per cent of the gross domestic product, a 16-year high, to be funded by a record high market borrowing of Rs4,51,000 crore.

"I don't think there is any reason to think that the 6.8 per cent will be crossed," Ahluwalia told reporters in New Delhi on Monday. ''There are many factors that determine the budget deficit, so whatever happens to one item can be offset by another item ... and other factors will lead to government maintaining the fiscal target,'' he said.

Speaking after releasing a book, 'Human resource management - a contemporary text' by Bhaskar Chatterjee, Ahluwalia also said the first full meeting of the Planning Commission, chaired by Prime Minister Manmohan Singh, will be held on 1 September. ''The main topic of discussion will be the state the economy," he said.

The meeting will carry out a mid-term appraisal of the eleventh five-year plan (2007-12). The meeting assumes significance at a time when almost half the country is hit by drought even as the manufacturing sector is yet to recover from the global meltdown.