Govt warns of fiscal deficit slippage

The Centre on Friday said it will not be easy torestrict the fiscal deficit to 4.6 per cent in 2011-12 on account ofuncertainty on the disinvestment front and a likely increase in subsidies, butmaintained that the slippage will be minimal.

 

Uncertainty on account of disinvestment receipts and a likely highersubsidy requirement does make it a challenging task to adhere to the overallfiscal deficit target for 2011-12, as per a Mid-Year Analysis tabled inParliament.

"There can be no denial that meeting the target will not be easythis year," it said, adding, "The government is, however, determinedto keep overshooting of the fiscal deficit target of 4.6 per cent as minimal aspossible."

However, the government said the overall fiscal policy stance for themacro economy remains on the consolidation track, even though there may be asmall transgression.

In the Budget, the government had estimated the fiscal deficit at Rs4,12,817 crore, or 4.6 per cent of the GDP. In the first half of 2011-12, thefiscal deficit was Rs 2.8 lakh crore, or 68 per cent of the Budget Estimate (BE).

"Higher levels of fiscal deficit as a percentage of BudgetEstimate during the first half of 2011-12 raises some concern when comparedwith the five-year moving average of 54.6 per cent," the mid-year reviewsaid.

However, the increase in the fiscal deficit in the first half may beseen in the context of front-loading of direct tax refunds (about Rs 62,230crore up to September) and one-time receipt from the auction of 3G and BWAspectrum in 2010-11, it said.

Citing global and domestic factors, the government today lowered theGDP growth forecast for the current fiscal to 7.5 per cent from 9 per cent.