Govt will stick to fiscal deficit target: Pranab Mukherjee

Finance Minister Pranab Mukherjee today said government will stick to the fiscal deficit target of 4.6 per cent of gross domestic product (GDP) for 2011-12, despite huge revenue sacrifice because of duty cuts on petroleum products.

"...We are still trying to keep the target," Mukherjee told reporters in the national capital, to a query on whether revenue forgone due to slashing excise and customs duties on petroleum products would impact fiscal deficit target.

ANALYSIS: Are Budget targets working against inflation control?

However, the Finance Minister said, the fiscal deficit would ultimately depend on final analysis based on revenue receipt and expenditure.

"But just now we need not rush to any conclusion," he said.

In June, while raising the price of diesel, kerosene and cooking gas, the government had also slashed the duties. The cuts would have meant a sacrifice of an annual Rs 49,000 crore by the central exchequer.

However, since the rate cuts take effect for the remaining three quarters only, the total loss will be around Rs 35,000-36,000 crore, including the share of states.

The government had earlier expressed concerns over dip in revenue collection - both direct and indirect taxes - due to volatility in global commodity prices and persistently high inflation.

The central government's fiscal deficit surged about 30 per cent in the first two months of the current financial year to Rs 1.30 lakh crore, on account of lower revenue collection.

The deficit was Rs 1 lakh crore in April-May 2010.

Inflation burden: Rs 5.8 lakh crore in 3 years

The sharp rise in deficit is on account of 28 per cent decline in tax revenues. Also, non-tax receipts more than halved in the first two months to Rs 5,613 crore, from Rs 12,761 crore in the corresponding period of the previous year.