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Wednesday, Apr 03, 2002

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Revised deficit target `within range'

Hema Ramakrishnan
Shaji Vikraman

"Indications are favourable since the Government did not resort to any market borrowings in March. However, the matching of receipts and expenditure could have also come about through a further compression in expenditure."

NEW DELHI, April 2

THE Finance Ministry is set to meet its revised fiscal deficit target of 5.7 per cent of the gross domestic product (GDP) for 2001-02, even if revenue collections fall short of the revised estimates, according to a top official.

Although data on direct tax collections up to March 31 is yet to flow in, official estimates up to March 26 this year show that net direct tax collections stood at Rs 64,058 crore amounting to 87.2 per cent of the revised estimate of Rs 73,497 crore for 2001-02.

However, fiscal deficit is unlikely to breach 5.7 per cent of the GDP since the likely shortfall in tax revenues are set to be off-set partly by the extra realisation from disinvestment receipts and savings on account of a further compression in expenditure.

One of the pointers to maintaining the fiscal deficit at the revised estimate level of 5.7 per cent of the GDP is the market borrowings. "Indications are favourable since the Government did not resort to any market borrowings in March. Technically, more monies could have been channelised through the public account to finance the deficit. However, the matching of receipts and expenditure could have also come about through a further compression in expenditure,'' said a senior official.

It has also mopped up close to Rs 7,094 crore as disinvestment receipts, which is Rs 2,094 crore higher than the revised estimate of Rs 5,000 crore.

A break-up of the direct tax collection figures up to March 26 indicates that corporation tax collections topped Rs 34,268 crore or roughly 87.7 per cent of the revised estimate. Income tax collections, on the other hand, touched Rs 29,790 crore or 86.5 per cent of the revised target.

The picture is bleak on the indirect tax front due to the continuing decline in customs collections up to March 15, this year. The Government has targeted a realisation of Rs 43,170 crore from customs and Rs 74,520 crore in excise in the revised estimates for 2001-02.

Data released by the Controller General of Accounts up to the end of February this year, shows that net tax revenues declined by 3.6 per cent up to the end of February and stood at Rs 1,04,676 crore as compared to Rs 1,08,658 crore in the corresponding period the previous year.

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