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The Economic Survey 2010-11 estimates the combined fiscal deficit of the Centre and States at 7.3 per cent of the Gross Domestic Product, against 9.5 per cent in 2009-10.
Stating that the deadline of April 2011 for the introduction of the Goods and Services Tax “is not likely to be met,” the Survey says: “Work is also under way to create and strengthen the IT infrastructure in State VAT departments so that their transition to GST becomes easier.”
The fiscal deficit of the States has been pegged at 2.5 per cent of GDP in 2010-11, against 3.3 per cent in 2009-10.
The Survey notes: “The estimated growth of tax revenues seems likely given the recovery in the economy to pre-crisis levels…It is critical to anchor expenditure reforms to realise the projected deficit levels.”
The fiscal deficit of the States is 34 per cent of the combined fiscal deficit of the Centre and States, or Rs 1.98 lakh crore in 2010-11, of a total fiscal deficit of Centre and states of Rs 5.76 lakh crore.
The revenue deficit of the States is expected to fall by over Rs 20,000 crore at Rs 26,189 crore in 2010-11. This has been brought about through revenue increases rather than expenditure cuts.
State revenues are expected to increase by Rs 1.04 lakh crore to Rs 9.06 lakh crore, an increase of 13 per cent. Of this, the State's own revenues are anticipated to increase by 16.7 per cent or over Rs 60,000 crore in 2010-11 at a budgeted level of Rs 4.26 lakh crore. Transfers from the Centre are expected to have increased by over Rs 20,000 crore in the last fiscal.
Non-tax receipts are expected to increase by another Rs 10,000 crore, the budgeted figure for 2010-11 being Rs 2.82 lakh crore.
Revenue expenditure of States is expected to increase by over Rs 83,000 crore, the budget estimates for 2010-11 being Rs 9.33 lakh crore. Capital spending is slated to rise by about Rs 13,000 crore at Rs 2.2 lakh crore.
The Government Debt Report 2010 indicates that between 2010-11 and 2014-15, the proportion of total expenditure to GDP is to go down by 2.5 percentage points to 13.5 per cent, and the proportion of tax to GDP is to rise by 1.4 percentage points to 12.2 per cent of GDP.
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