Fiscal deficit rises to 92 pc of budget estimates
Lower than expected realisation from disinvestment programme and huge outflows from the small savings had a telling effect on government’s fiscal deficit, which exceeded a whopping 92 per cent of budgetary estimates at the end of December.
According to the Controller General of Accounts (CGA) data, the government’s fiscal deficit went up to Rs 3.81 lakh crore, or 92.3 per cent of the Budget estimates in the April-December period as against an estimated Rs 4.12 lakh crore, or 4.6 per cent of the GDP in 2011-12. The data revealed that government’s revenue receipt stood at Rs 4.98 lakh crore during the nine-month period against the Budget estimate of Rs 7.89 lakh crore for the entire fiscal. This implies that in order to meet its rising expenses, the government now has to borrow the extra amount from the Reserve Bank of India, which has no other option than printing the currency notes and increasing money supply to further fuel inflation.
Although the government has said it is committed to rein in the deficit so that it does not far exceed the targeted 4.6 per cent in 2011-12, it may be difficult with only three months remaining to the fiscal year to end, according to analysts. Adding fuel to the fire are the lower than expected tax and non-collections so far. While the government as admitted it will miss the tax collection target this year.
At the end of December, non-tax revenue collection has stood at 62.2 per cent of Budget estimates, compared to 130 per cent in the same period a year ago.
High food and oil subsidy bill, high crude prices in the international market, falling rupee vis-à-vis dollar, high interest rates back home and weak market sentiments in recent days have had a cumulative effect on government finances and have helped fan inflation and fiscal deficit. A weak market sentiment has also come in the way of government’s targeted earnings of Rs 40,000 crore on account of share sales in public sector units.
The government has been able to garner on Rs 11,000 crore till now through this route.
The RBI has already warned against the sharp surge in the fiscal deficit, saying at the the current juncture when there is a need to boost private investment, the increase in fiscal deficit could potentially crowd out credit to the private sector. The rising deficit has already made international investors wary of investing in India.
DH News Service
