India’s fiscal deficit might exceed estimates: Pranab Mukherjee

India's fiscal deficit for 2011-12 could be more than the level projected in the union budget. The deficit, which was seen to have fallen to 4.5 per cent in the 2009-10 fiscal from 6.5 per cent in the previous financial year, could now be way above estimates, finance minister Pranab Mukherjee said.

The government's fiscal deficit as a percentage of the country's gross domestic product (GDP) might be higher than the budget projection, Mukherjee said at an industry gathering yesterday.

With the country's fiscal deficit rising to Rs353,000 – about 86 per cent of the fiscal 2011-12 target of around Rs46,000 crore - in the first eight months of the current financial year, the full year could end with a substantial rise in the country's market borrowing, according to Mukherjee.

However, he said, without a substantial increase in both investment demand and consumption demand, any accommodative monetary policy will be unsustainable.

"But unfortunately, the fiscal deficit may be more in 2011-12 than projected," he said while delivering his address at a three-day international conference organised by the Institute of Chartered Accountants of India in New Delhi.

With inflation growth turning negative towards the close of December, the Reserve Bank of India (RBI) is widely expected to reverse its tight-money policy and ease interest rates.