The government is planning to revise the
fiscal deficit target notwithstanding the
additional borrowing plans in the second half of the fiscal, Chief Economic Advisor to the Finance Minister,
Kaushik Basu, said on Wednesday.
"There is no thinking of revising the target of 4.6 per cent (fiscal deficit target), but we are aware that it is a target that is not easy (to meet)," Basu said on the sidelines of a banking summit.
He also said the country has to go a little slow on the fiscal consolidation process as there is a recessionary tendency in the world.
Inflation numbers uncomfortable: Basu "There is a recessionary tendency in the world. If you too quickly pull back demand, you may aggravate the recessionary situation. We also have to be mindful of this as our industrial growth in the last couple of months has not been very good," Basu pointed out.
The government has announced to borrow an additional Rs 52,900 crore from the market over and above Rs 4.17 lakh crore estimated earlier. This has fuelled fears about missing the fiscal target for the current fiscal which is set at 4.6 per cent of the GDP.
Moreover, the government is far from achieving the disinvestment target of Rs 40,000 crore this year.
"There is a disinvestment programme that we still have plans to go after. Hope, we will keep the fiscal situation (in terms of fiscal deficit, revenue deficit and government deficit) in control," Basu said.
Referring to inflation, he said that both the government and the Reserve Bank's efforts are moving in one direction to contain high prices.
"Questions can be raised on whether the Reserve Bank is moving faster than the ministry in curbing inflation. The fact is, both are moving in the same direction," he said.
Supporting the non-intervention policy of the central bank with respect to the falling rupee, Basu said the depreciation is mainly due to higher inflation along with the ongoing crisis in Eurozone area.
"The rupee fall does put pressure on us. There are two forces working behind it. One is that we have inflation that is above that of the US for two years. So there is some loss of value in the exchange rate. The second side is that every time there is turbulence in Europe, money seems to flow into the US treasury," Basu said, adding the ongoing debt crisis in Eurozone area remains a matter of great concern for the domestic economy.
Supporting the rollback of subsidy on petroleum products, he said this will help in containing inflation.
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