Fiscal deficit touches 76 per cent of budget estimate

Showing signs of stress, the government's fiscal deficit in the first six months of the current financial year reached 76 per cent of the budget estimate of Rs 5.42 lakh crore.

The fiscal deficit, which is the difference between government receipts and spending, touched Rs 4.12 lakh crore in April-September, or 76 per cent of the budget estimate, against 65.6 per cent of the budget estimate in the corresponding period of 2012-13.

The deficit is without accounting for a substantial portion of oil subsidies, which is likely to exceed budget estimates as oil import bill will be much higher due to depreciation in rupee against the dollar. The subsidy on diesel and cooking fuel may be double the provision of Rs 20,000 crore.

Net tax receipts for the first six months of the fiscal year touched Rs 3.07 lakh crore while total expenditure was Rs 8.09 lakh crore.

The fiscal deficit during 2012-13 came down to 4.9 per cent of the GDP from 5.8 per cent a year earlier. In the current financial year, the government plans to lower the deficit to 4.8 per cent of the GDP.

Finance Minister P Chidambaram at many occasions has reiterated that red line has been drawn for the fiscal deficit and it will not be breached.

The revenue deficit during six months period went up to Rs 3.22 lakh crore, or 84.8 per cent of the budget estimate, compared with 75.1 per cent last year.

Revenue collection slowed down to 34.8 per cent of the budget estimate (Rs 8.84 lakh crore) as against 38.1 per cent in the previous fiscal.

With the aim to stick to fiscal deficit target, the government had last month announced slew of austerity measures, including reduction in non-plan expenditure, ban on holding seminars in five-star hotels and creation of new jobs. While announcing the steps, the government did not quantify the savings it would make by the expenditure rationalisation that was announced on September 18.

An expert panel headed by Kirit S Parikh on Wednesday suggested that diesel prices should be hiked by a steep Rs 5 per litre, kerosene by Rs 4 a litre and cooking gas (LPG) rates by Rs 250 per cylinder immediately to cut fuel subsidy bill by Rs 72,000 crore.

After the price hike oil companies should be given a fixed subsidy of only Rs 6 per litre on diesel and any difference between cost of production and retail price should be passed on to consumers.