The Hindu Business Line : Govt hopes to wipe out revenue deficit in 2008-09

As per the Fiscal Responsibility and Budget Management, Act, the Government should reduce fiscal deficit to 3 per cent of the GDP by end of the 2008-09 financial year.

Our Bureau

New Delhi, Oct. 9 The Government is hoping to wipe out revenue deficit and reduce the fiscal deficit to 3 per cent of the gross domestic product (GDP) in 2008-09.

“We are on track to bring down the fiscal deficit to 3.3 per cent by the end of current financial year and to three per cent in the next fiscal (2008-09), and hopefully remove revenue deficit by then,” the Finance Secretary, Dr D. Subbarao, said while speaking at the launch of the Organisation for Economic Cooperation and Development’s (OECD) Economic Survey of the Indian Economy here on Tuesday.

As per the Fiscal Responsibility and Budget Management (FRBM) Act, the Government should reduce fiscal deficit to three per cent of the GDP and eliminate revenue deficit by end of the 2008-09 financial year.

The challenges which are being faced by the country at the moment include pushing the agriculture growth rate to 4 per cent during the Eleventh Plan, expand employment opportunities, improving delivery mechanism and building world-class infrastructure.

Stating that the US sub-prime housing mortgage crisis would have an impact on India, Dr Subbarao said, “The Government faces the challenge of maintaining the impossible trinity of comparative exchange rate, suitably low interest rate and soft inflation regime.”

According to the OECD Secretary General, Mr Angel Gurria, long-term growth prospects on India could be bolstered by continuing the current fiscal consolidation process and by extending the FRBM Act for the next five years. “This will free up resources for growth in private investment and also show resolve and provide a very visible sign of fiscal disciplines to the markets,” he added.

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