The Hindu Business Line : Revenue, fiscal deficits may exceed budget estimates: Govt

New Delhi, Oct. 24 It’s official now. The Government has admitted that the final figures of fiscal deficit and revenue deficit for the current fiscal might exceed the budget estimates, following the perceived slowdown in the global economy and its possible impact on India.

This has been reflected in the fiscal responsibility and budget management (FRBM) related quarterly review statement tabled by the Union Finance Minister, Mr P. Chidambaram, in Parliament on Friday. The statement pertained to the first quarter of the current financial year.

Mr Chidambaram had couple of days ago said that the global financial crisis was exerting pressure on all the economies and that it was perhaps likely that the Centre would overshoot the budget target of fiscal deficit and revenue deficit.

Even as the FRBM statement has recognised that the deficit targets are likely to be exceeded, it has said that the process of fiscal consolidation, which is a necessary pre-requisite for sustained growth, continues to be in focus, notwithstanding the slowdown in the economy due to global uncertainty and pressure of increase in crude prices.

“Harmonising the need to provide resources for development expenditure within the fiscal discipline imposed by FRBM Act, the Government will continue to take the necessary measures to moderate inflation, prune unproductive expenditure and closely monitor FRBM targets,” the Finance Ministry has said in the quarterly statement.

The FRBM statement noted that tax buoyancy shown in the first quarter promises a good outlook for the remaining part of the fiscal year. It was also highlighted that sustained efforts are being made to have better cash management and expenditure moderation in non-priority areas to make adequate resources available from realised receipts for priority items.

The mismatch in receipts and expenditure for Government are much more pronounced in the first quarter on account of steps taken to evenly pace plan expenditure during the year without tying it down to actual revenue receipts in the earlier part of the financial year.

“The endeavour is to right pace plan expenditure to ensure availability of adequate resources for execution of budgeted schemes. Delaying expenditure, to match revenue receipts, would result in rush of expenditure in the latter half of the financial year, thereby, affecting the quality of execution and related outcomes,” the Government has said.

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