The Hindu Business Line : TN proposes to extend deadline for reducing revenue deficit by a year

In a Bill, passed by the Assembly on Tuesday to amend the Act, the Government now proposes to reduce the ratio of revenue deficit to revenue receipt every year by 3 per cent to 5 per cent depending on the economic situation in that year to a level below 5 per cent by March 31, 2008 and adhere to it thereafter.

Earlier, the Government had committed to reducing the ratio of revenue deficit to total revenue receipt beginning from the initial financial year 2002-03 with a medium-term goal of below 5 per cent by March 31, 2007.

As far as the reducing the ratio of fiscal deficit to Gross State Domestic Product (GSDP) beginning from financial year 2002-03, the Government has proposed to achieve the target by March 31, 2008 and adhere to it thereafter against the earlier deadline of March 31, 2007. The medium-term goal has been fixed at not being more than 3 per cent of fiscal deficit to GSDP against 2.5 per cent earlier.

The Government now proposes to cap the total outstanding guarantees to 100 per cent of the total revenue receipt in the preceding year or at 10 per cent of the GSDP, whichever is lower. It shall also cap the risk-weighted guarantees to 75 per cent of the total revenue receipt in the preceding year or at 7.5 per cent of GSDP, whichever is lower.

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