New
Delhi: The fiscal deficit for 2001-02 may exceed the
targeted 4.7 per cent of the GDP due to a dismal tax-revenue
collection and a steady rise in the non-Plan expenditure,
Fitch Ratings India has said in its latest India Economy
Update report.
The report further says: "With the slowing-down of
revenue collection and every likelihood of the divestment
target not being met this year, the Central government will
not be able to contain the fiscal deficit to its targeted
level of 4.7 per cent of the GDP."
The fiscal deficit during April-October 2001 has already
touched Rs 63,383 crore 54.5 per cent of the target of
Rs 1.16 lakh crore set for fiscal 2001-02. The figure during
the same period last year was Rs 50,899 crore 45.7 per
cent of the target.
The report, which stressed on slashing non-essential expenditure
to contain expenditure to contain fiscal deficit, nevertheless,
cautioned against cutting down the Plan expenditure. "It
should be realised that a slowing-down of economy would
always put a drag on government finances. In such a situation,
the government needs to ensure that the Plan expenditure
is carried on without any hindrance so that the growth impetus
does not wane."
"To contain the fiscal deficit within the target, the
government should strive to raise the direct tax to the
GDP ratio to 10 per cent from the existing 3.4 per cent,"
it said. The tax revenue collection during April-October
2001 has been dismal Rs 58,653 crore representing just
36 per cent of the full year target owing to a slower
demand growth and industrial downturn.
During the previous year, the achievement was higher at
44.5 per cent of the target. The total receipts till October
2001, therefore, had only been Rs 1,09,017 crore (42.1 per
cent
of the target). The total expenditure, on the other hand,
has touched Rs 1,72,400 crore, accounting for 45.9 per cent
of the current fiscals target of Rs 3,75,223 crore.
"The disturbing fact here is that around 72 per cent
of the total expenditure was non-Plan," it added. "Indias
record suggests that more often than not, it is the Plan
expenditure that gets the axe in order to contain fiscal
deficit."
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