Mumbai: The Reserve Bank of India (RBI) has cautioned the government of its deteriorating fiscal position arising from off-budget liabilities like subsidy hikes, loan waivers as also the additional fiscal burden from the implementation of the 6th Pay Commission recommendations.

''Early fiscal indicators point to some strains on the centre's fiscal position which has worsened somewhat in relation to Budget estimates,'' the RBI said in its quarterly review of monetary policy.

RBI said the government's budget estimates of revenue deficit of Rs55,184 crore this fiscal amounts to 1.0 per cent of the country's gross domestic product (GDP), while the fiscal deficit, estimated to touch Rs1,33,287 crore, amounts to 2.5 per cent of GDP.

The RBI, has asked the government to closely monitor of the growing off-budget liabilities as these would have implications on inflation and external sector management.

The spurt in international crude oil prices has also place a heavy burden on the exchequer, with the government's oil import bill nearly doubling to $120 billion in 2008-09 from $69 billion in the last fiscal.

The government also has to issue oil bonds of about Rs94,000 crore to offset losses of oil marketing companies for selling subsidised petroleum products.

Public sector oil marketing companies have been provided $ 4.3 billion (Rs19,325 crore) against oil bonds purchased under the Special Market Operation (SMO) scheme up to 25 July 2008.

The government's subsidy bill on fertilisers, food and loan waiver could cross Rs1,00,000 crore this fiscal, RBI noted.

The RBI has revised GDP growth for 2008-09 from 8.0-8.5 per cent to around 8.0 per cent, barring domestic or external shocks.

''While the policy actions would aim to bring down the current intolerable level of inflation to a tolerable level of below 5.0 per cent as soon as possible and around 3.0 per cent over the medium-term, at this juncture a realistic policy endeavour would be to bring down inflation from the current level of about 11.0-12.0 per cent to a level close to 7.0 per cent by 31 March 2009,'' RBI said.

While there are early signs of some moderation in money supply and deposit growth, they continue to expand above the indicative projections warranting continuous vigilance and appropriate and timely policy responses.

In view of the evolving environment of heightened uncertainty in global markets and the dangers of potential spillovers to domestic markets, liquidity management will continue to receive priority in the hierarchy of policy objectives over the period ahead, it said.