The government is committed to fiscal consolidation and will restrict fiscal deficit to 4.1 per cent of the GDP in the current financial year, says the Economic Survey.

The pre—budget document also said that achieving the target is a “daunting task” in the backdrop only a moderate increase in indirect taxes and a large subsidy bill despite significant decline in oil subsidies burden in this fiscal.

The fiscal deficit target of 4.1 per cent as envisaged in the Budget 2014—15 “will be met”. Fiscal deficit is the gap between government expenditure and revenue.

“Should the revenues not pick—up sufficiently, there would be need to persist with some compression in expenditure so as to meet the deficit target,” the survey tabled in Parliament said, adding going forward enhanced revenue generation will be a priority.

The survey said the implementation of Goods and Services Tax (GST) and other tax reforms would also play a crucial role in achieving enhanced revenue generation.

Overhauling the subsidy regime, it said, should entail further reducing fuel subsidies, tackling fertiliser subsidies, moving to Aadhaar based direct cash transfers of food subsidy would pave the way for expenditure rationalisation.

For April—December 2014, fiscal deficit stood at Rs 5.32 lakh crore which is 100.2 per cent of Budget Estimates and higher than the last five years average of 77.7 per cent.

It also said that the fiscal consolidation is a necessity but the quality is imperative to make it sustainable.

“To achieve this end, it would be necessary to put in place a medium to long term fiscal policy frame work with explicit revenue, expenditure and deficit target,” it added.

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