The Hindu Business Line : Deficit-GDP ratios

The article "Declining deficit-GDP ratios: untold story of numbers" (Business Line, February 17) brought out clearly the importance of reducing deficit-GDP ratios.

Recent statistics of Asian Development Bank reveal that the combined gross fiscal deficit of the Centre and State governments was as high as 10.1 per cent of GDP in 2002-2003 and the situation may have deteriorated further in 2003-2004. The fiscal deficit of the Centre was up about 40.3 per cent in April-September 2003 as compared to the same period in 2002.

This is largely on account of revenue expenditure far exceeding revenue receipts during the first half of 2003. The fiscal deficit will only grow wider on account of the already pronounced cut in the taxes on election-eve.

Thus, the rapidly widening revenue deficit is conspicuously out of sync with the roadmap set out in the Fiscal Responsibility and Budget Management Act, 2003, which castes an obligation on the Centre to eliminate revenue deficit by 2007. The Centre should appreciate its obligation under the FRBM Act and should act accordingly.

C. Ramesh

Keeramangalam (TN)

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